Overview

The Competition Policy
Review

In 2014, the
Government commissioned a ‘root and branch’ review of
Australia’s competition laws and policy to ensure Australia
continues to experience long-term productivity
growth.

The Competition
Policy Review (Harper Review) was led by a Review Panel chaired by
Professor Ian Harper and supported by a secretariat. The terms of
reference, issued on 27 March 2014, set out that the
Review Panel was to ensure thorough engagement with all interested
stakeholders. The terms of reference further set out that the key
areas of focus would be to identify impediments across the economy
that restrict competition and reduce productivity, which are not in
the broader public interest.

The Review Panel released an Issues Paper on 14 April 2014 and a
Draft Report on 22 September 2014. The Review Panel received almost
350 submissions in response to the Issues Paper and around 600
submissions to the Draft Report.

The Review’s
Final Report, released on 31 March 2015, contained 56
recommendations on competition policy, law and institutions. The
Harper Review concluded that while the concepts, prohibitions and
structure of the Competition and
Consumer Act 2010 (the Act) are sound, some provisions
are unnecessarily complex, imposing costs on the economy and
burdens on business, as well as inhibiting the adaptability of the
laws to changing circumstances.

The Government
received 140 submissions in response to the Final
Report.

The Government
released its response to the Harper Review on 24 November
2015, and supports 40 of the recommendations in full or in
principle and a further 5 recommendations in part. The
Government also noted or remained open to the remaining
11 recommendations, subject to further review and
consultation.

Exposure Draft

An Exposure Draft
of this Bill was released for public consultation from
5 September 2016 to 28 October 2016. A total of 61 written
submissions were received, of which 5 were confidential. [1]

Definition of competition

Schedule 1 to this
Bill amends the definition of ‘competition’ in section
4 of the Act, to clarify that competition includes competition from
goods and services that are capable of importation, in addition to
those actually imported.

Date of
effect : Schedule 1 does not commence at
all unless the Competition and
Consumer Amendment (Misuse of Market Power) Act 2017
receives Royal Assent. If that Act receives Royal Assent, Schedule
1 commences from a day to be fixed by Proclamation. If no earlier
day is fixed by Proclamation, Schedule 1 commences the day after 6
months from the day this Act or the Competition and Consumer Amendment (Misuse of
Market Power) Act 2017 receives Royal Assent (whichever
is later).

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Financial
impact : Nil.

Human rights
implications : This Schedule does
not raise any human rights issue. See Statement of Compatibility with Human
Rights — Chapter 16.

Compliance cost
impact : Nil compliance cost impact.

Cartels

Schedule 2 to this
Bill makes a number of amendments to the Act to simplify the
provisions on cartel conduct and better target
anti-competitive conduct, including:

â¢
confining the application of the provisions to cartel conduct
affecting competition in Australian markets; and

â¢
changing the scope of the joint venture exceptions to more
appropriately exempt legitimate joint ventures.

Date of
effect : Part 1 of Schedule 2, containing
the substantive amendments to the provisions, commences at the same
time as Schedule 1. Part 2 of Schedule 2, which renumbers the
cartel provisions, commences immediately after the commencement of
Part 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Price signalling and concerted
practices

Schedule 3 to this
Bill repeals Division 1A of Part IV of the Act, the price
signalling provisions.

Schedule 3 also
extends section 45 to prohibit a corporation from engaging in a
concerted practice that has the purpose, effect or likely effect of
substantially lessening competition, and inserts an exception for
where the only parties to a concerted practice are the Crown and
one or more government authorities.

Schedule 3 also
repeals the separate prohibition on exclusionary provisions from
the Act.

Date of
effect : Schedule 3 commences at the same
time as Schedule 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Third line forcing

Schedule 7 to this
Bill amends the Act to prohibit third line forcing only where it
has the purpose, effect or likely effect of substantially lessening
competition.

Date of
effect : Schedule 7 commences at the same
time as Schedule 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Financial
impact : Nil.

Human rights
implications : This Schedule does
not raise any human rights issue. See Statement of Compatibility with Human
Rights — Chapter 16.

Compliance cost
impact : A decrease of $3.6 million per
year .

Resale price maintenance

Schedule 8 to this
Bill amends the resale price maintenance (RPM) and notification
provisions to allow a corporation or person to notify the
Commission of RPM conduct, as an alternative to seeking
authorisation from the Commission for RPM
conduct.

Schedule 8 also
provides an exemption from the RPM prohibition for conduct between
related bodies corporate.

Date of
effect : Schedule 8 commences at the same
time as Schedule 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Financial
impact : Nil.

Human rights
implications : This Schedule does
not raise any human rights issue. See Statement of Compatibility with Human
Rights — Chapter 16.

Compliance cost
impact : An increase of $0.16
million per year.

Authorisations, notifications and class
exemptions

Schedule 9 to this
Bill amends Part VII and Part IX of the Act to:

â¢
consolidate the various authorisation provisions, including those
relating to mergers, into a single authorisation process;

Date of
effect : Items 1 to 103 of Schedule 9
commence at the same time as Schedule 1. Item 104 commences
immediately after items 1 to 103. Items 105 to 132 commence at
the same time as Schedule 1. Item 133 commences immediately after
Schedule 1. Items 134 to 167 commence at the same time as Schedule
1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Power to obtain information, documents and
evidence

Schedule 11 to
this Bill extends the Commission’s power to obtain
information, documents and evidence in section 155 to cover
investigations of alleged contraventions of court enforceable
undertakings and merger authorisation
determinations.

Schedule 11 also
introduces a ‘reasonable search’ defence to the offence
of refusing or failing to comply with section 155, and increases
the fine for non-compliance with section 155.

Date of
effect : Schedule 11 commences at the same
time as Schedule 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Access to services

Schedule 12 amends
Part IIIA of the Act, which contains the National Access Regime
(Regime), to ensure that it better addresses the economic problem
of an enduring lack of effective competition in markets for
nationally significant infrastructure services.

Date of
effect : Schedule 12 commences at the same
time as Schedule 1.

Proposal
announced : The proposal was announced
in the Australian Government Response to the Competition Policy
Review on 24 November 2015.

Application and transitional
provisions

Schedule 13 to
this Bill inserts a new Division 3 into Part XIII of the Act, which
deals with the transitional application of amendments made by a
number of other Schedules to this Bill.

Date of
effect : Schedule 13 commences at
the same time as Schedule 1.

Proposal
announced : This proposal relates to
those announced in the Australian Government Response to the
Competition Policy Review on 24 November 2015.

Financial
impact : Nil.

Human rights
implications : This Schedule does
not raise any human rights issue. See Statement of Compatibility with Human
Rights — Chapter 16.

Compliance cost
impact : Nil compliance cost
impact.

Other amendments

Schedule 14 to
this Bill makes various amendments to streamline the administration
of the Act, to reduce compliance burdens for business, individuals
and within Government, while preserving the protections available
under the Act.

Date of
effect : Schedule 14 commences on
the day after Royal Assent.

Proposal
announced : The measures in Schedule
14 were announced on 13 June 2014 in a communique by the
Legislative and Governance Forum on Consumer Affairs.

Compliance cost
impact : A small but unquantifiable
decrease in compliance costs.

Summary of regulation impact
statement

Regulation impact on
business

Impact : The measures included in this
Bill have an overall reduction in annual compliance costs.

Main
points :

â¢
The Government has been informed of the regulatory impacts of
various reform options by the findings of Harper Review, previous
independent reviews and inquiries, and through public and targeted
consultations at multiple stages.

â¢
The Harper Review made a number of recommendations which are
deregulatory in nature and result in a compliance cost saving for
those subject to the law, specifically those related to: the
definition of competition; third line forcing; class exemptions;
and the power to obtain information, documents and evidence.

â¢
A number of the recommendations made by the Harper Review involve
substantive changes to improve the competition law, specifically
those related to: price signalling and concerted practices; resale
price maintenance; and collective bargaining. These measures will
result in an increase in compliance costs, particularly during the
initial transitional period as businesses seek legal advice to
ensure their practices continue to be compliant with the Act. The
increase in compliance costs also incorporates the costs of seeking
exemption for conduct via authorisation or notification. While the
increased availability of exemptions is beneficial in terms of
certainty, only the financial cost is quantified.

â¢
The remainder of the measures contained in this Bill are expected
to have nil compliance cost impact.

Outline of chapter

1.1
Schedule 1 to this Bill amends the definition of
‘competition’ in section 4 of the Act, to clarify that
competition includes competition from goods and services that are
capable of importation, in addition to those actually imported.

Context of amendments

1.2
The provisions of the Act are focused on conduct that damages
competition in markets in Australia. When applying the provisions
of the Act, it is therefore necessary to analyse the relevant
market and the forms of competition which may affect that
market.

1.3
‘Market’ and ‘competition’ are both defined
terms within the Act, and the Harper Review considered the
appropriateness of the respective definitions.

1.4 Competition is
defined in section 4 to include competition from imported goods or
from services rendered by persons not resident or not carrying on
business in Australia.

1.5 Market is
defined in section 4E to mean a market in Australia for goods and
services that are substitutable for, or otherwise competitive with,
each other. It includes the area of close competition between firms
for goods and services.

1.6
The Harper Review found that although the current definition of
market appropriately focuses on Australian markets, the definition
of competition should be amended so there is no doubt it includes
competition from potential imports of goods and services, not just
actual imports.

Summary of new law

1.7
Schedule 1 amends the definition of ‘competition’ to
clarify that it includes potential imports of goods and services
and is not limited to actual imports of goods and services.

Comparison of key
features of new law and current law

New
law

Current law

Competition
expressly includes goods and services that are capable of being
imported, in addition to goods and services that are imported.

Competition
includes goods and services that are imported.

Detailed explanation of new
law

1.8
The definition of competition is amended so that the term
specifically includes:

â¢
Competition from goods that are imported, or are capable of being
imported, into Australia; and

â¢
Competition from services that are rendered, or are capable of
being rendered, by persons not resident or not carrying on business
in Australia. [Schedule 1, item 1, subsection
4(1)]

1.9
The express inclusion of goods and services that are
‘capable’ of being imported does not require
consideration of every product and service that could conceivably
be imported into Australia. Rather, this change clarifies that a
credible threat of import competition is a relevant component of
competition analysis.

1.10
Where there is only a remote possibility of importation, for
example because importation would not be commercially viable, this
possibility would not constitute a credible threat of import
competition and should not form part of a competition analysis as
the goods or services are not ‘capable’ of being
imported.

Commencement, application and transitional
provisions

1.11 Schedule 1 does not commence
at all unless the Competition
and Consumer Amendment (Misuse of Market Power) Act 2017
receives Royal Assent. If that Act receives Royal Assent, Schedule
1 commences from a day to be fixed by Proclamation. If no earlier
day is fixed by Proclamation, Schedule 1 commences the day after 6
months from the day this Act or the Competition and Consumer Amendment (Misuse of
Market Power) Act 2017 receives Royal Assent (whichever
is later).

Outline of chapter

2.1
Schedule 2 to this Bill makes a number of amendments to the Act to
simplify the provisions on cartel conduct and better target
anti-competitive conduct, including:

â¢
confining the application of the provisions to cartel conduct
affecting competition in Australian markets; and

â¢
changing the scope of the joint venture exceptions to more
appropriately exempt legitimate joint ventures.

Context of amendments

2.2
Division 1 of Part IV of the Act prohibits certain types of
provisions within contracts, arrangements or understandings between
competitors that amount to cartel conduct.

2.3
A provision of a contract, arrangement or understanding between
competitors is a ‘cartel provision’ if it has: the
purpose of output restriction, market sharing or division, or
bid-rigging; or the purpose, effect or likely effect of
price-fixing. Cartel conduct is anti-competitive in
most circumstances, as it usually increases prices or reduces
consumer choice, and is prohibited on a per se basis.

2.4
The Act contains both criminal and civil sanctions for
contravention of the prohibition on cartel provisions, at
Subdivisions B and C of Division 1 of Part IV of the Act.
Subdivision D contains a number of exceptions to the general
prohibition, some of which are available for both the criminal and
civil sanctions, and some of which are available for only one type
of sanction.

2.5
A number of specific changes were recommended by the Harper Review,
which were intended to simplify the cartel conduct provisions and
better target them at anti-competitive conduct. These included
broadening the exceptions for joint ventures, which the Harper
Review considered were too narrow and potentially captured
pro-competitive conduct.

Summary of new law

2.6
Schedule 2 to this Bill makes a number of amendments to Division 1
of Part IV, to simplify the cartel conduct provisions and better
target anti-competitive conduct.

2.7
The defined term ‘trade or commerce’ is incorporated
into various provisions within Division 1 of Part IV, to expressly
confine the application of the provisions to cartel conduct
affecting competition in Australia or between Australia and other
places.

2.8
The joint venture exceptions are broadened to apply to:

â¢
arrangements or understandings (in addition to contracts); and

â¢
joint ventures for the acquisition of goods and services (in
addition to the production or supply of goods and services).

2.9
The joint venture exceptions are also amended so that they only
apply to:

â¢
cartel provisions that are for the purposes of, and reasonably
necessary for, undertaking the joint venture; and

â¢
joint ventures that are not carried on for the purpose of
substantially lessening competition.

2.10
The burdens of proof for the joint venture exceptions are also
amended to require the defendant to prove the elements of the
relevant exception on the balance of probabilities.

2.11
The ‘output restriction’ purpose condition in
paragraph 44ZZRD(3)(a) is broadened to include restrictions on
acquisitions of goods or services, to address any gap resulting
from the repeal of the separate prohibition on exclusionary
provisions.

Comparison of key
features of new law and current law

New
law

Current
law

The cartel conduct
provisions apply to conduct ‘in trade or commerce’,
i.e. conduct occurring within Australia, or between Australia and
places outside Australia.

The cartel conduct
provisions are not expressly confined to conduct ‘in trade or
commerce’.

The joint venture
exceptions apply to contracts, arrangements or
understandings.

The joint venture
exceptions apply only to contracts or intended
contracts.

The joint venture
exceptions apply to joint ventures for the acquisition of goods, in
addition to joint ventures for the production and/or supply of
goods or services.

The joint venture
exceptions apply to joint ventures for the production and/or supply
of goods or services.

The joint venture
exceptions apply to cartel provisions that are for the purposes of
a joint venture and reasonably necessary for undertaking a joint
venture.

The joint venture
exceptions apply to cartel provisions that are for the purposes of
a joint venture.

The joint venture
exceptions do not apply to joint ventures that are carried on for
the purpose of substantially lessening
competition.

The joint venture
exceptions are available to any joint venture within the definition
of section 4J of the Act.

The defendant
bears a legal burden of proof, in establishing the joint venture
exceptions.

The defendant
bears an evidential burden of proof, in establishing the joint
venture exceptions.

Detailed explanation of new
law

Cartel conduct affecting ‘trade or
commerce’

2.12
The Harper Review was of the view that, for cartel conduct to be an
offence within Australia, it should have an effect on trade or
commerce within, to or from Australia, consistent with the
treatment of cartel conduct in comparable overseas
jurisdictions.

2.13
Schedule 2 amends a number of provisions in Division 1 of
Part IV to include a specific requirement that cartel conduct
must be ‘in trade or commerce’. Trade or
commerce is defined in section 4 to mean trade or
commerce within Australia, or between Australia and places outside
Australia. [Schedule 2, items 3 to 8,
subsection 44ZZRD (note), paragraphs 44ZZRD(4)(c) to (e),
44ZZRD(4)(f), 44ZZRD(4)(g), 44ZZRD(4)(h), 44ZZRD(4)(ha),
44ZZRD(4)(i) and 44ZZRD(4)(j)]

2.14
The intention of this amendment is to expressly confine the
application of the provisions to cartel conduct that affects
businesses or consumers in Australia.

2.15
This amendment aligns the cartel conduct provisions with the
Act’s objective of enhancing the welfare of Australians.

Exceptions for joint
ventures

2.16
The Harper Review’s view was that the narrow framing of the
joint venture exceptions to the cartel provisions may have the
effect of limiting legitimate commercial transactions and
increasing business compliance costs.

2.17
The Harper Review also noted that broadening the joint venture
exception for cartel conduct will not put joint ventures beyond the
reach of the competition law, as section 45 prohibits joint venture
arrangements that have the purpose, effect or likely effect of
substantially lessening competition.

2.18
Schedule 2 makes a number of amendments to broaden the joint
venture exceptions to both the criminal cartel provisions and the
civil cartel provisions (in sections 44ZZRO and 44ZZRP
respectively).

2.19
Firstly, the amended joint venture exceptions apply to arrangements
and understandings containing cartel provisions, in addition to
contracts containing such provisions. This recognises that not all
features of a joint venture will be contained in a formal written
contract. [Schedule 2, items 11, 12 and 17,
subsections 44ZZRO(1) and
44ZZRP(1)]

2.20
Secondly, the amended joint venture exceptions are extended to
apply to joint ventures for the acquisition of goods or services.
The amended exceptions apply to one or more of the production,
supply or acquisition of goods or services. [Schedule 2, items 13 and 18, paragraphs
44ZZRO(1)(b) and 44ZZRP(1)(b)]

2.21
Joint ventures for the acquisition of goods or services are common,
and may encourage pro-competitive economic activity, for
example by allowing smaller businesses to increase their bargaining
power, decrease their cost base and become more
price-competitive.

2.22
Thirdly, the amended joint venture exceptions only apply to cartel
provisions that are both for the purposes of the joint venture and
reasonably necessary for undertaking the joint venture (where the
reference to ‘purpose’ should be read in the context of
section 4F of the Act). [Schedule 2, items 13 and 18, paragraphs
44ZZRO(1)(a) and 44ZZRP(1)(a)]

2.23
The addition of the ‘reasonably necessary’ element
tightens the exceptions to ensure that they exclude cartel
provisions that are not reasonably necessary for the joint
venture.

2.24
For example, a provision that specified the price at which outputs
of a mining joint venture should be sold may be reasonably
necessary for undertaking a mining joint venture. However a
provision that similarly specified that output from mines not part
of the joint venture must be sold at the same price may be for the
purposes of, but is unlikely to be reasonably necessary for, the
joint venture.

2.25
Fourthly, the amended joint venture exceptions only apply to joint
ventures that are not carried on for the purpose of substantially
lessening competition. This amendment confines the exceptions to
joint ventures established for genuine commercial purposes.
[Schedule 2, items 13 and 18, paragraphs
44ZZRO(1)(ba) and 44ZZRP(1)(ba)]

2.26
The defence in section 76C to proceedings relating to an
exclusionary provision illustrates a precedent for this approach.
That defence (which is repealed by Schedule 4 to this Bill) is
similarly limited to exclusionary provisions that are for the
purposes of a joint venture and which do not have the purpose,
effect or likely effect of substantially lessening competition.

2.27
The reference to ‘purpose’ should also be read in the
context of section 4F of the Act, such that a defendant will be
unable to rely on the joint venture exceptions if the purpose of
substantially lessening competition is a substantial purpose, even
if it is not the only purpose or the primary purpose.

2.28
Finally, the joint venture exceptions are amended to increase the
standard of proof that a defendant must discharge in raising the
relevant exception. To raise the joint venture exception in a civil
action (section 44ZZRP), the defendant must prove the relevant
matters on the ‘balance of probabilities’. To raise the
joint venture exception in a criminal action (section 44ZZRO), the
defendant is under a ‘legal burden’ and this must also
be discharged on the balance of probabilities. [Schedule 2, items 12, 15, 17 and 20, subsections
44ZZRO(1), 44ZZRO(1)(note), 44ZZRP(1) and
44ZZRP(2)]

2.29
In either case, the defendant must meet the standard of a
‘balance of probabilities’ to raise the relevant joint
venture exception, as opposed to the standard of proof for the
current evidential burden (‘a reasonable possibility’).
Given this practical similarity, the two exceptions are discussed
together below.

2.30
The increase in the burden of proof on the defendant is appropriate
and justifiable in light of the extension of the exceptions to
arrangements or understandings containing a cartel provision.

2.31
Currently, for either of the exceptions to apply, the relevant
cartel provision must be contained in a contract and the defendant
must satisfy an evidential burden - that is, the defendant
must produce evidence suggesting a reasonable possibility that the
matters in section 44ZZRO or 44ZZRP exist. It is likely that the
production of the contract, which should be readily available to
the defendant if it exists, would satisfy this evidential burden.
It would then fall to the prosecution to prove on the balance of
probabilities (in a civil action) or beyond reasonable doubt (in a
criminal action), that the evidence produced does not establish the
relevant exception - for example, by proving that the
cartel provision is not for the purposes of the joint venture.
Under the current exceptions, an evidential burden on the defendant
is reasonable as the primary evidence as to the nature of the
claimed joint venture would be before the court.

2.32
In contrast, under the amended joint venture exceptions which
extend to arrangements or understandings, the relevant element of
the joint venture may be contained across several documents of
greater or lesser formality, and may not be contained in any form
of written documentation (for example, it may have been established
through a series of conversations or agreed in a meeting). In this
circumstance, it is likely to be relatively easy and inexpensive
for a defendant to produce evidence suggesting a reasonable
possibility that their joint venture falls within the relevant
exception, even if this were not the case.

2.33
However, it would be extremely difficult and expensive for the
prosecution to obtain sufficient evidence to prove in the first
instance, to the applicable standard, that the relevant exception
did not apply, as the evidence needed to do this may be known only
to, and be held by, the defendant. This practical difficulty may
create scope for abuse of the joint venture exceptions by parties
who are not genuinely engaged in a joint venture to which the
exceptions apply.

2.34
Increasing the standard of proof which the defendant must meet
improves this situation as, in practice, the defendant is required
to provide stronger evidence to the court in order to prove on the
balance of probabilities that the relevant exception applies. The
defendant will be in a unique position to easily and cheaply
produce such evidence, having ready access to the full range of
formal and informal correspondence between the parties.

2.35
With the additional information before the court, the prosecution
would then have sufficient information to determine whether to make
a case in reply and thereby seek to prove to the requisite standard
that the exception does not apply (for example, to argue based on
that evidence that the joint venture was, in fact, carried on for
the purpose of substantially lessening competition).

2.36
Widening the application of the exceptions will decrease the
ongoing business compliance costs for genuine commercial joint
venture undertakings, by increasing certainty that genuine joint
venture activities will not contravene the cartel conduct
prohibition. However, without the higher burden of proof on the
defendant, it is likely that the practical difficulties for the
prosecutor would be such that anti-competitive, collusive
conduct would be able to avoid the cartel conduct prohibitions. The
higher burden is therefore necessary in order to broaden exceptions
in the manner described above.

Exclusionary provisions

2.37
The ‘output restriction’ purpose condition is amended
to prohibit cartel provisions with the purpose of directly or
indirectly preventing, restricting or limiting production,
capacity, supply or acquisition. The inclusion of acquisition is
achieved by adding a fourth subparagraph to paragraph 44ZZRD(3)(a).
[Schedule 2, item 2, subparagraph
44ZZRD(3)(a)(iv)]

2.38
This change is made as a result of the repeal of the separate
prohibition on exclusionary provisions, as detailed in Chapters 3
and 4, and addresses a possible gap in the law following that
repeal.

Renumbering

2.39
Part 2 of Schedule 2 renumbers Division 1 of Part IV to the Act, in
order to make the cartel conduct provisions easier to navigate.
[Schedule 2, item 38, Division 1 of Part
IV]

2.40
Amendments are also made to Schedule 1 to the Act, to mirror the
renumbering of the Act itself. [Schedule 2, item 39, Division 1 of Part 1 of
Schedule 1 to the Act]

2.41
Schedule 2 also provides for references in other Acts, instruments
or documents to be construed as a reference to the renumbered
provision where appropriate. [Schedule 2, item
40]

Consequential amendments

2.42
Following the amendments to the joint venture exceptions,
consequential amendments are made to sections 44ZZRO and 44ZZRP so
that they also apply to arrangements and understandings.
[Schedule 2, items 14 and 19, paragraphs
44ZZRO(1)(c), 44ZZRO(1)(d), 44ZZRP(1)(c) and
44ZZRP(1)(d)]

2.43
Following the addition of subparagraph 44ZZRD(3)(a)(iv), amendments
are made to various provisions of the Act to add a reference to the
new subparagraph 44ZZRD(3)(a)(iv) alongside existing references to
subparagraph 44ZZRD(3)(a)(iii). [Schedule 2, items 1, 9 and 10, subsection
44ZZRD(5) and paragraphs 6(2C)(h) and
44ZZRD(7)(a)]

2.44
Following the amendment to apply the joint venture exceptions to
arrangements and understandings, complex additional subsections
relating to arrangements and understandings have been removed from
section 44ZZRO. [Schedule 2, item 16,
subsections 44ZZRO(1A) and 44ZZRO(1B)]
.

2.45
As a defendant is now under a legal burden to raise the joint
venture exceptions, subsection 44ZZRO is amended to remove a
requirement for the defendant to give the prosecutor a written
notice setting out the facts and witnesses on whom the defendant
wishes to rely. [Schedule 2, item 16, subsections
44ZZRO(2) to 44ZZRO(4)]

Commencement, application and transitional
provisions

Outline of chapter

3.1
Schedule 3 to this Bill repeals Division 1A of Part IV of the Act,
the price signalling provisions.

3.2
Schedule 3 also extends section 45 to prohibit a corporation from
engaging in a concerted practice that has the purpose, effect or
likely effect of substantially lessening competition, and inserts
an exception for where the only parties to a concerted practice are
the Crown and one or more government authorities.

3.3
Schedule 3 also repeals the separate prohibition on exclusionary
provisions from the Act.

Context of amendments

Price signalling

3.4
Division 1A of Part IV of the Act was added in 2012 and prohibits
the anti-competitive disclosure of pricing and other
information (price signalling). The provisions apply only to a
single industry (banking) and no cases have ever been brought for
contravention of the prohibitions.

3.5
The Harper Review noted that Division 1A is complex, particularly
as defining the circumstances under which price disclosure is
pro-competitive or benign is difficult. The public disclosure of
pricing information can help consumers to make informed choices and
is unlikely to be harmful to competition. Where such disclosures
occur in private, this may facilitate anti-competitive
collusion between competitors, such as the coordination of pricing
decisions resulting in higher price outcomes. However, the private
disclosure of pricing information may in some circumstances be
pro-competitive or a necessary part of business, for example
in the case of a joint venture or similar type of collaborative
business activity.

3.6
The Review further considered that other provisions of the Act
could deal with anti-competitive price signalling, particularly
section 45. It also considered that there was no policy rationale
for price signalling laws that applied only to the banking
sector.

3.7
The Harper Review concluded that the price signalling provisions
are not fit for purpose and recommended repealing them.

3.8
It further recommended that concerns about the ability of
section 45 to address price signalling be addressed by
expanding the section to include a prohibition on concerted
practices (in addition to contracts, arrangements or
understandings) with the purpose, effect or likely effect of
substantially lessening competition.

Exclusionary provisions

3.9
See Chapter 4 for detail on the context of the repeal of the
separate prohibition on exclusionary provisions.

Summary of new law

3.10
Division 1A of Part IV of the Act is repealed, and section 45 of
the Act is expanded to include the concept of a ‘concerted
practice’.

3.11
An exemption is inserted at subsection 45(8AA), where the only
persons engaging in a concerted practice are the Crown (in right of
the Commonwealth, a State or Territory) and one or more government
authorities.

3.12
Subparagraphs 45(2)(a)(i) and 45(2)(b)(i) are repealed, to remove
the separate prohibition on exclusionary provisions from the
Act.

Comparison of key
features of new law and current law

New
law

Current law

The
anti-competitive disclosure of pricing and other information
is dealt with under the more general prohibitions in the
competition law.

The
anti-competitive disclosure of pricing and other information
is separately and specifically prohibited.

A corporation
is prohibited from engaging in a concerted practice that has the
purpose, effect or likely effect of substantially lessening
competition.

No
equivalent.

An exemption
from the prohibition on concerted practices is added where the only
parties are a government and one or more authorities of that
government.

No
equivalent.

There is no
separate prohibition on contracts, arrangements or understandings
containing exclusionary provisions.

There is a
separate prohibition on contracts, arrangements or understandings
containing exclusionary provisions.

Detailed explanation of new
law

3.13
Schedule 3 repeals Division 1A of Part IV of the Act, relating to
the anti-competitive disclosure of pricing and other
information. [Schedule 3, item 1, Division 1A of Part
IV]

3.14
Schedule 3 also broadens section 45 to apply to ‘concerted
practices’. This is intended to capture conduct previously
falling within the separate prohibitions within Division 1A. At the
same time, subsections of section 45 are amended for
simplification. [Schedule 3, items 2, 4 and 5,
subsections 45(1) to 45(3),45(6) 45(7) and
45(8)]

3.15
Schedule 3 also inserts an exception into section 45 where the only
parties to a concerted practice are the Crown and one or more
government authorities. [Schedule 2, item 5, subsection
45(8AA)]

Concerted practices

3.16
Schedule 3 amends section 45 to prohibit corporations from engaging
in a ‘concerted practice’ that has the purpose, effect
or likely effect of substantially lessening competition. Schedule 3
also rewrites subsections 45(1), 45(2) and 45(3) to incorporate
concerted practices and simplify the provision. Section 45 will
continue to also prohibit making, arriving at or giving effect to a
contract, arrangement or understanding with the purpose, effect or
likely effect of substantially lessening competition. [Schedule 3, item 1, subsections 45(1), 45(2) and
45(3)]

3.17
Schedule 3 does not insert a definition of ‘concerted
practice’ into the Act. The Harper Review considered it
unnecessary to introduce a legislative definition of
‘concerted practice’, as the word
‘concerted’ has a clear and practical meaning.

3.18
The concept of a ‘concerted practice’ under section 45
is to be distinguished from the concept of ‘acting in
concert’ as it appears in section 45D. The concept of a
‘concerted practice’ is to be read and applied in the
context of section 45 and with reference to the explanatory
material that follows, and not in the context of section 45D or any
case authority or explanatory material on section 45D. The
following is intended to guide the interpretation of the term while
retaining a flexible and principled application of the concept.

Characteristics of a concerted
practice

3.19
A concerted practice is any form of cooperation between two or more
firms (or people) or conduct that would be likely to establish such
cooperation, where this conduct substitutes, or would be likely to
substitute, cooperation in place of the uncertainty of
competition.

3.20
It is not necessary that any (or all) of the parties to a concerted
practice should act:

â¢
in the same manner;

â¢
in the same market; or

â¢
at the same time.

3.21
It is intended that the concept of a ‘concerted
practice’ should capture conduct that falls short of a
contract, arrangement or understanding as the courts have
interpreted each of those terms in section 45.

3.22
A concerted practice does not require, but may involve:

â¢
the formality or legally enforceable obligations characteristic of
a contract;

â¢
the express communication characteristic of an arrangement. A
concerted practice may be established in the absence of any direct
contact between the firms, for example where firms communicate
indirectly through an intermediary such as a peak industry body;
or

â¢
the commitment characteristic of an understanding. A concerted
practice may exist even if none of the parties is obliged, either
legally or morally, to act in any particular way.

Example 3.1 - Concerted
practice

In a small country
town, there are three petrol stations: X, Y and Z. Immediately
before adjusting its prices, X sends an email to Y and Z with a
price. After several emails, it becomes clear to Y and Z that
immediately after sending the email with the price, X changes its
price to match the email. Y and Z join in, and each emails their
own proposed price adjustments to the other two. A practice
develops so that, with a few exceptions, where one petrol station
emails their prices, the three stations all change their prices to
match the price in the email.

At no point do any
of them expressly or implicitly agree to reciprocate the
communication or to change their prices accordingly. On some
occasions after one of the stations announces a price rise, one of
the other stations chooses not to match the price, and thereby
gains extra customers on that occasion by increasing their price by
less than the other two stations and having the lowest price. There
are no consequences of this occasional divergence from the usual
practice.

X, Y and Z are
each likely to have contravened section 45 by engaging in a
concerted practice with the purpose, effect or likely effect of
substantially lessening competition. Even though none of the
parties committed to communicate or change their prices, and even
though there were some occasions where a petrol station did not
change its prices in accordance with the email, the effect of the
overall practice was that the petrol stations could increase their
prices safe in the knowledge that this would be unlikely to result
in a loss of customers as the others would most likely reciprocate.
This practice has substantially reduced price competition for
petrol in the town.

3.23
A concerted practice may exist in addition to, or ancillary to, a
contract, arrangement or understanding.

3.24
It is not necessary that a concerted practice have an
anti-competitive ‘provision’, as it is the
practice itself which has the anti-competitive purpose,
effect or likely effect.

3.25
The concept of a concerted practice is not intended to capture mere
innocent parallel conduct, for example where two firms who are
determining their prices independently happen to charge similar
prices for the same product (see Example 3.4).

3.26
Similarly, it is not intended to capture conduct such as the public
disclosure of pricing information which facilitates price
comparison by consumers, as this conduct will increase rather than
substantially lessen competition.

3.27
The following examples illustrate that a concerted practice:

â¢
does not necessarily involve regular or repeated conduct - a single
instance of conduct may constitute a concerted practice (Example
3.2);

â¢
will typically, but not necessarily, involve the communication of
commercial information either by one party to another, or between
the parties, generally to reduce or eliminate uncertainty as to the
future conduct of the firm making the communication; and

â¢
does not require that any (or all) of the parties to the practice
reciprocate the actions of the first party or in any way change
their conduct as a result of the first party’s actions
- the actions of the first party will be sufficient to
establish the concerted practice, and the culpability of each other
party to the concerted practice will depend on the nature of their
involvement and their subsequent action.

3.28
Once conduct has been found to be a concerted practice, the central
issue, and the determinant of whether the relevant conduct is
prohibited under section 45, is whether the concerted practice has
the purpose, effect or likely effect of substantially lessening
competition.

Example 3.2 - Concerted
practice as a single instance of conduct

Salmon fishers in
a small geographic region form an industry association that meets
regularly, usually to discuss general industry issues. At one
meeting, one fisher (X) states that they will restrict their output
to a certain quantity for the next three months, in order to
increase the price of salmon in the region. X shares this
information in the hope that the other fishers will similarly
restrict their output, so that X can adopt the strategy without
fearing it will lose customers to the other
fishers.

X has shared
commercially sensitive information which reduces uncertainty as to
X’s likely output over the next three months. X is likely to
have contravened section 45, by engaging in a concerted practice
with the purpose or likely effect of substantially lessening
competition, even if X was unable to convince all of the other
salmon fishers to adopt a similar strategy and even some or all of
the others did not adopt such a strategy (that is, even if the
ultimate effect was not a substantial lessening of
competition).

Bank X and Bank Y
are two competing banks. A week before banks are expected to
announce their respective interest rates for the next quarter, X
sends Y a document setting out the interest rate it will announce
the following week. Y did not ask for this information, and does
not act on this information by either reciprocating with
information about its own intended interest rate or changing its
strategy to match X’s interest rate.

The different
actions of X and Y will have different implications under section
45.

X is likely to
have contravened section 45, by engaging in a concerted practice
with the purpose or likely effect of substantially lessening
competition, even if this was not the actual effect because Y did
not act on the information.

X’s
communication to Y has made Y a party to a concerted practice.
However, Y is not likely to have contravened section 45, as Y did
not use the information to inform a decision or change strategy,
and this conduct did not have the purpose, effect or likely effect
of substantially lessening competition. Y could further ensure it
did not breach section 45 by expressly rejecting X’s
approaches and requesting that X not communicate any further
information of this nature.

Example 3.4 - Mere
parallel conduct

Company X
manufactures and distributes the most popular budget television,
which is stocked by all major television retailers and two smaller
retailers. X supplies the televisions to large retailers for $300
each, and charges the smaller retailers $320 each due to the lower
quantity ordered.

The major
retailers are able to sell the televisions for $320 and make a
commercial profit. However, the two smaller retailers independently
determine that they cannot sell the televisions for any less than
$340 and still make a commercial profit.

The conduct of the
two smaller retailers is unlikely to constitute a concerted
practice. The two smaller retailers have a similar cost base, and
have taken this cost base into account in independently determining
the prices they will charge for the television. This is merely
innocent parallel conduct, which the concerted practices
prohibition in section 45 is not intended to
capture.

Crown exemption

3.29
An exemption is inserted at subsection 45(8AA), so that
section 45 does not apply to a concerted practice where the
only persons engaging in it are, or would be:

â¢
the Crown in right of the Commonwealth, and one or more authorities
of the Commonwealth; or

â¢
the Crown in right of a State or Territory, and one or more
authorities of that State or Territory. [Schedule 3, item 5, subsection
45(8AA)]

3.30
This exemption is similar to the exemption for related bodies
corporate in subsection 45(8), and recognises that although the
Crown can engage in market activities through government
authorities, the Crown and its authorities cannot benefit from the
exemption for related bodies corporate.

3.31
This exemption ensures that the prohibition against concerted
practices does not unnecessarily hinder the social policy
objectives that the Commonwealth, a State or a Territory may pursue
through market activities. In particular, the exemption exists to
ensure that cooperation by authorities to fulfil community service
obligations is not hindered.

Example 3.5 - Exemption
for related bodies corporate

A State government
is responsible for the governance of two State-owned
electricity corporations. Each year, the State government asks the
providers to coordinate which geographical areas each corporation
will agree to service over the next year. This information allows
the State government to ensure that community service obligations
are met and there is no area left without an electricity provider
if no private provider is available.

While this conduct
may constitute a concerted practice, this would not contravene
section 45 due to the exemption in subsection 45(8AA). Although the
two electricity corporations have shared what would ordinarily be
commercially sensitive information, the only parties to this
concerted practice are a State government and two authorities of
that State government.

Operation of section 45

3.32
The following is intended to clarify the operation of section 45 as
amended. Where provisions are amended for simplification, their
operation is not intended to change except as described in this
Chapter.

3.33
Paragraphs 45(1)(a) and 45(1)(b) set out that a corporation must
not enter into or give effect to a contract, arrangement or
understanding, if the contract, arrangement or understanding (or a
provision thereof) has the purpose, or would have or be likely to
have the effect, of substantially lessening competition.
[Schedule 3, item 1, paragraphs 45(1)(a) and
45(1)(b)]

3.34
Paragraph 45(1)(c) sets out that a corporation must not engage with
one or more persons in a concerted practice that has the purpose,
or has or is likely to have the effect, of substantially lessening
competition. [Schedule 3, item 1, paragraph
45(1)(c)]

3.35
Subsection 45(2) makes it clear that a corporation must not give
effect to a prohibited provision of a contract, arrangement or
understanding that was made or arrived at before the commencement
of section 45 as amended. [Schedule 3, item 1, paragraph
45(2)]

3.36
Subsection 45(3) contains a specific definition of
‘competition’ for the purposes of section 45, which
focuses on the relevant markets in which competition is to be
considered. When considering whether conduct substantially lessens
competition for the purposes of section 45, the appropriate markets
in which competition is to be assessed include any market in which
a corporation (or related body corporate) that is party to the
contract, arrangement or understanding containing the prohibited
provision supplies or acquires goods or services (or would supply
or acquire goods or services, but for the anti-competitive
provision).

3.37
With the introduction of the concept of a concerted practice, the
definition of competition is further extended, for the purposes of
section 45, in relation to a concerted practice. This ensures
that there is a consistent approach to determining the markets for
analysis of any potential anti-competitive effects. [Schedule 3, item 1, paragraph
45(3)(b)]

3.38
Subsection 45(5A) is inserted to prevent the application of section
45 to conduct which would also contravene section 47, or would do
so aside from subsection 47(10), an authorisation under section 88
or a notification under section 93. This applies only to contracts,
arrangements and understandings, and not to concerted practices.
This provision replaces the former subsection 45(6) insofar as it
referred to conduct under section 47. [Schedule 3, item 9, subsection
45(5A)]

3.39
In addition to the new exception in subsection 45(8AA),
section 45 contains a number of existing exceptions, which are
amended to incorporate concerted practices:

â¢
an exception for the acquisition of shares in the capital of a body
corporate or any assets of a person (subsection 45(7));
and

â¢
an exception where the only parties to the contract, arrangement,
understanding or concerted practice are related bodies corporate
(subsection 45(8)). [Schedule 3, item 5, subsections 45(6) to
45(8)]

3.40 Similarly, the exception in
subsection 51(2) is amended to extend the exception to concerted
practices. This means that in determining whether a contravention
of Part IV (other than sections 45D, 45DA, 45DB, 45E, 45EA or 48)
has been committed, regard shall not be had to concerted practices
which meet the applicable requirements of subsection 51(2) as
amended . [Schedule 3, items 16, 18, 19 and 20,
subsection 51(2AA), paragraphs 51(2)(a), 51(2)(aa), 51(2)(c),
51(2)(d) and 51(2)(g)]

Exclusionary provisions

3.41
Schedule 3 to this Bill also repeals subparagraphs 45(2)(a)(i)
and 45(2)(b)(i) to remove the separate prohibition on
exclusionary provisions from the Act. This is achieved by repealing
subsections 45(1) to 45(3) and rewriting the provisions without the
separate prohibition on exclusionary provisions. [Schedule 3, item 2, subsections 45(1) to
45(3)]

3.42
As detailed in Chapter 4, section 4D, which contains the definition
of exclusionary
provision , is repealed as the repeal of the separate
prohibition on exclusionary provisions makes the definition
redundant. [Schedule 4, item 1, section
4D]

3.43
As detailed in Chapter 2, a consequential amendment is made to the
cartel conduct provisions to address any gap in the law as a result
of the repeal of the separate prohibition on exclusionary
provisions. [Schedule 2, item 2, subparagraph
44ZZRD(3)(a)(iv)]

Consequential amendments

3.44
Minor consequential amendments are made to various provisions of
the Act to reflect the addition of the concept of concerted
practices and other amendments as detailed in this Chapter.
[Schedule 3, items 3, 11 to 15, 17 and 21 to 29,
subsections 45(5A), 45(8A), 45(9), 51(4),93AC(2), 166(1) and
166(3), paragraphs 4(2)(a), 4(2)(b), 6(2)(d), 51(2)(b), 84(1)(b),
84(3)(b), 93AB(1)(a) and 93AB(1)(b) and subparagraph
6(2)(b)(i)]

3.45
Schedule 3 also makes amendments to Schedule 1 to the Act, to
correspond to the amendments made by Schedule 3 to the Act itself
and apply those amendments to persons. [Schedule 3, items 6 to 10 and 30 to 37, Division
1A of Part 1 of Schedule 1, subsections 45(1) to 45(3), 45(5A),
45(6), 45(7) to 45(9), 51(2AA) and 51(4), and paragraphs 51(2)(a),
51(2)(aa), 51(2)(b), 51(2)(c), 51(2)(d) and 51(2)(g) of Schedule 1
to the Act]

Commencement, application and transitional
provisions

Outline of chapter

4.1
Schedule 4 to this Bill repeals the definition of
‘exclusionary provision’ and a defence to the
prohibition on exclusionary provisions, following the repeal of
this prohibition by Schedule 3.

4.2
As detailed in Chapter 2, a related amendment is made by Schedule 2
to the provisions on cartel conduct, to ensure there is no gap
following the repeal of the prohibition on exclusionary
provisions.

Context of amendments

4.3
Sub-paragraphs 45(2)(a)(i) and 45(2)(b)(i) of the Act respectively,
prohibit making a contract or arrangement, arriving at an
understanding, or giving effect to a contract, arrangement or
understanding, containing an exclusionary provision.

4.4 Exclusionary
provision is defined in section 4D, and broadly
means a provision of an actual or proposed contract, arrangement or
understanding between competitors, where the provision has the
purpose of preventing, restricting or limiting supplies of goods
and services to, or acquisitions from, particular persons or
classes of persons.

4.5
Section 76C contains a defence to proceedings relating to an
exclusionary provision where the provision is for the purposes of a
joint venture and does not have the purpose, effect or likely
effect of substantially lessening competition.

4.6
The prohibition on exclusionary provisions substantially overlaps
with the prohibition on cartel provisions, particularly where a
provision in a contract, arrangement or understanding between
competitors has the purpose of:

â¢
restricting the actual or likely production of goods, supply of
goods or services, or the capacity to supply services (i.e. output
restriction) (paragraph 44ZZRD(3)(a)); or

â¢
allocating customers or geographical areas of supply or acquisition
between the parties (i.e. market sharing or division) (paragraph
44ZZRD(3)(b).

4.7
Where a provision has the purpose of output restriction or market
sharing or division, that provision is likely to constitute both a
cartel provision and an exclusionary provision.

4.8
Section 45 contains a number of anti-overlap provisions which
prevent the application of section 45 to conduct which contravenes
one of several other provisions. However, there is no anti-overlap
provision preventing the application of section 45 to conduct which
contravenes the prohibition on cartel provisions.

4.9
The Harper Review considered that this overlap is unnecessary and
increases the complexity of the law, and recommended that the
separate prohibition on exclusionary provisions be repealed, with
an amendment to the provisions on cartel conduct to address any
resulting gap in the law.

Summary of new law

4.10
Schedule 4 to this Bill repeals the definition of
‘exclusionary provision’ in section 4D and makes
consequential amendments to remove references to section 4D
throughout the Act.

4.11
The defence to the exclusionary provision prohibition is also
repealed as it is no longer needed.

Comparison of key
features of new law and current law

New
law

Current law

‘Exclusionary provision’ is not
defined in the Act.

‘Exclusionary provision’ is defined
in the Act.

There is no
defence as there is no longer a separate prohibition on
exclusionary provisions.

There is a defence
to the prohibition against exclusionary
provisions.

Detailed explanation of new
law

4.13
The definition of ‘exclusionary provision’ is redundant
following the repeal of the separate prohibition on exclusionary
provisions (as detailed in Chapter 3).

4.14
Schedule 4 to this Bill also repeals section 76C, the defence to
the prohibition on exclusionary provisions, as it is made redundant
by the repeal of the separate prohibition. [Schedule 4, item 2, section
76C]

Consequential amendments

4.15
Consequential amendments are made to provisions of the Act which
reference section 4D or exclusionary provisions, to remove such
references. [Schedule 4, items 3-5,
subsections 93AC(1) and 10.08(1)]

Context of amendments

5.3
Sections 45B and 45C relate to covenants and largely duplicate the
concepts of section 45. Covenants are a form of agreement in which
one or more parties promise to do, or refrain from doing, some
action. The distinction between contracts and covenants appears
throughout the Act, for example in section 87 which details the
orders the Court may make and contains separate references to
contracts and covenants.

5.4
In a legal sense, there are technical differences between contracts
and covenants. However, the Harper Review found that these
technical differences have little to no impact on the
agreement’s effect on competition.

5.5
The Harper Review recommended that provisions which are redundant
or unnecessarily duplicate other provisions could be removed, and
identified the provisions relating to covenants as one example of
unnecessary duplication.

Summary of new law

5.6
Schedule 5 to this Bill simplifies the provisions of the Act by
inserting definitions of ‘contract’ and
‘party’ and defining those terms to include
covenants.

5.7
Provisions which deal separately with covenants, which are now
redundant, are repealed.

Comparison of key
features of new law and current law

New
law

Current law

Contract
is defined, to include a covenant.

Contract is not
defined.

Party
to a contract that is a covenant, is defined to include a person
bound by or entitled to the benefit of a covenant.

Party is not
defined.

Covenants are
dealt with under the provisions of the Act referring to
contracts.

Throughout the
Act, contracts and covenants are dealt with under separate
provisions.

Detailed explanation of new
law

5.8
Schedule 5 to this Bill inserts a definition of
‘contract’ into the Act, and deems
‘contract’ to include a covenant. The definition does
not define contract more generally, as the definition is well
established in the common law. [Schedule 5, item 1, subsection
4(1)]

5.9 Schedule
5 also inserts a definition of
‘ party’ to clarify that
a party to a contract that is a
covenant, includes a
person who is bound by, or entitled to the
benefit of, the covenant. [Schedule 5, item 1, subsection
4(1)]

Consequential
amendments

5.10
The new definitions of ‘contract’ and
‘party’ render the separate provisions concerning
covenants redundant. As a result, those provisions are repealed and
other provisions are amended as required to remove any remaining
references to covenants. [Schedule 5, items 2-17, sections 45B, 45C, and
44ZZRQ, subsections 4(3), 45(5), 46A(6), 87(3) and 87(5),
paragraphs 4F(1)(a), 6(2)(e), 87(3)(a), 87(3)(c) and 87(3)(d), and
subparagraphs 4F(1)(a)(i) and
6(2)(b)(i)]

5.11
Schedule 5 also makes amendments to Schedule 1 to the Act, to
correspond to the amendments made by Schedule 2 to the Act itself
and apply those amendments to persons. [Schedule 5, items 18-20, section44ZZRQ,
subsection 45(5), section 45B and 45C of Schedule
1]

Commencement, application and transitional
provisions

Outline of chapter

6.1
Schedule 6 to this Bill amends the Act to increase the maximum
penalty applying to breaches of the secondary boycott provisions.
This aligns the penalty with penalties for other breaches of the
competition law.

Context of amendments

6.2
Broadly, a secondary boycott involves one person, in concert with
another person, engaging in conduct that hinders or prevents a
third person supplying goods or services to, or acquiring goods or
services from, a fourth person.

6.3
Sections 45D and 45DB prohibit secondary boycotts, where the
purpose and actual or likely effect of the conduct is respectively:
to cause substantial loss or damage to the fourth person’s
business; or to prevent or substantially hinder the third person
from engaging in trade or commerce involving the movement of goods
between Australia and overseas.

6.4
Section 76 details the maximum pecuniary (monetary) penalties for
breaches of the Act. Under paragraph 76(1A)(a), a corporation that
breaches the secondary boycott provisions (section 45D or 45DB) is
liable to a civil penalty not exceeding $750,000. By comparison,
other breaches of the Act attract maximum penalties of $10 million
or higher depending on the benefit obtained and the body
corporate’s annual turnover.

6.5
Secondary boycotts are harmful to trading freedom and therefore
harmful to competition. The Harper Review saw no reason for the
significant variation in maximum penalties, and recommended
aligning the maximum penalty for breaches of secondary boycott
provisions with the maximum penalty for other breaches of the
competition law.

Summary of new law

6.6
Schedule 6 to this Bill increases the maximum pecuniary penalty
that applies for secondary boycotts, in line with the maximum
penalty for other breaches of the competition law.

Comparison of key features of new law and
current law

New
law

Current law

The maximum
penalty for a breach of the secondary boycott provisions is the
greatest of:

â¢
$10,000,000;

â¢
three times the total value of the benefits obtained from the
secondary boycott; or

â¢
if the court cannot determine the total value of these benefits,
10% of the annual turnover of the corporation for the twelve months
leading up to when the secondary boycott occurred.

The maximum
penalty for a breach of the secondary boycott provisions is
$750,000.

Commencement,
application and transitional provisions

Outline of chapter

7.1
Schedule 7 to this Bill amends the Act to prohibit third line
forcing only where it has the purpose, effect or likely effect of
substantially lessening competition.

Context of amendments

7.2
Third line forcing is a form of exclusive dealing (also known as a
vertical trading restriction) and involves the supply of goods or
services, or the giving of a particular price or discount, on the
condition that the purchaser also acquire goods or services from
another unrelated person, or a refusal to supply because the
purchaser will not agree to such a condition.

7.3
Third line forcing is prohibited under subsections 47(6)
and 47(7) and paragraphs 47(8)(c) and 47(9)(d) of the Act. It
is prohibited on a per se basis, that is, it is prohibited
irrespective of its purpose, effect or likely effect.

7.4
Third line forcing may be exempted from the prohibition, and
protected from legal action under the Act, for example, by filing a
notification with the Commission under section 93 of the Act. The
Commission may revoke the notification if it considers that the
likely public detriment from the conduct outweighs the likely any
public benefit from the conduct.

7.5
Australia is the only comparable jurisdiction that prohibits third
line forcing on a per se basis. Other jurisdictions, including the
United States, Canada, the European Union and New Zealand, assess
similar conduct under a test that looks at the effect of the
conduct on competition.

7.6
The Harper Review noted that third line forcing is similar to
second line forcing, in which a corporation supplies a product on
the condition that the purchaser acquires another product from the
same corporation (or
a related corporation). Second line forcing is also known as
‘bundling’ or ‘tying’, and is not
prohibited on a per se basis. Rather, it is prohibited where the
conduct has the purpose, effect or likely effect of substantially
lessening competition.

7.7
The Harper Review found there was no need for third line forcing to
be prohibited on a per se basis and singled out from other forms of
vertical trading restriction which are subject to a competition
test. The Harper Review acknowledged the availability of an
exemption through the notification process, but found that the
regulatory cost of lodging a notification is unnecessary, because
in most cases the notification will be allowed.

7.8
The Harper Review recommended that third line forcing be prohibited
only where the conduct has the purpose, effect or likely effect of
substantially lessening competition.

Summary of new law

7.9
Schedule 7 to this Bill amends section 47 of the Act so that third
line forcing is only prohibited where it has the purpose, effect or
likely effect of substantially lessening competition.

Comparison of key
features of new law and current law

New
law

Current law

Third line forcing
is prohibited only where it has the purpose, effect or likely
effect of substantially lessening competition.

Third line forcing
is prohibited on a per se basis.

Detailed explanation of new
law

7.10
Subsection 47(1) of the Act prohibits a corporation engaging in
exclusive dealing in trade or commerce. Subsections 47(2) to 47(9)
set out various forms of conduct which constitute exclusive
dealing, including third line forcing in subsections 47(6) and
47(7) and paragraphs 47(8)(c) and 47(9)(d).

7.11
Subsection 47(10) provides that the forms of exclusive dealing
listed in that subsection are only prohibited where they have the
purpose, effect or likely effect of substantially lessening
competition. Forms of exclusive dealing not listed in subsection
47(10) are prohibited on a per se basis.

7.12
Schedule 7 amends subsection 47(10) so that all forms of exclusive
dealing are prohibited where the conduct has the purpose, effect or
likely effect of substantially lessening competition. The
references to the specific types of exclusive dealing conduct to
which the test currently applies are removed. [Schedule 7, item 1, subsection
47(10)]

7.13
As all third line forcing conduct is now subject to a substantial
lessening of competition test, Schedule 9 makes consequential
amendments to the notification provisions. These amendments are
detailed in Chapter 9, and ensure the grounds on which the
Commission is able to consider a notification are consistent for
all forms of exclusive dealing that may be notified.

7.14
Following the amendment to the provisions for notification of
exclusive dealing, subsection 47(10A), which specifically deals
with notifications for third line forcing, is repealed.
[Schedule 7, item 4, subsection
47(10A)]

Consequential amendments

7.15
Schedule 7 makes a minor amendment to the wording in paragraphs
47(10)(a) and 47(10(b). References to ‘that conduct’
have been changed to ‘the conduct that constitutes the
practices of exclusive dealing’, to make clear that the
‘practice’ referred to in subsection 47(1) is also
‘conduct’. [Schedule 7, items 2 and 3, paragraphs 47(10(a)
and 47(10)(b)]

7.16
Schedule 7 also makes amendments to Schedule 1 to the Act, to
correspond to the amendments made by Schedule 7 to the Act itself
and apply those amendments to persons. [Schedule 7, items 5-8, subsections 47(10) and
47(10A) and paragraph s47(10(a) and 47(10)(b) of Schedule 1 to the
Act]

Commencement, application and transitional
provisions

Outline of chapter

8.1
Schedule 8 to this Bill amends the resale price maintenance (RPM)
and notification provisions to allow a corporation or person to
notify the Commission of RPM conduct, as an alternative to seeking
authorisation from the Commission for RPM conduct.

8.2
Schedule 8 also provides an exemption from the RPM prohibition for
conduct between related bodies corporate.

Context of amendments

8.3
Broadly, RPM involves the supply of goods on the condition that the
goods not be sold below a price specified by the supplier. RPM is a
form of vertical restraint concerning resale prices, and is
prohibited under section 48 on a per se basis. Section 96
specifies conduct that constitutes RPM.

8.4
The Harper Review noted that RPM may have varied impacts on
competition. In some circumstances, RPM may facilitate
anti-competitive collusion. However, RPM will not have a
substantial effect on competition in a market if the good or
service is subject to strong competition. RPM may be
pro-competitive and beneficial for consumers where, for
example, it creates an incentive for retailers to invest in
training their staff on the use of a complex product.

8.5
The Harper Review also noted that RPM is becoming more commonplace
in online markets, which are an increasingly significant part of
the economy. A number of online business models now use
distribution arrangements which may constitute RPM, but provide
benefits such as expanding the range of product sold in
Australia.

8.6
The Commission may grant authorisation for RPM conduct where it
would result in a net public benefit. Authorisation for RPM has
been available since 1995, but is seldom used relative to
authorisations for other prohibited conduct. The Harper Review
noted a concern that the cost and delay of the authorisation
process is a deterrent to businesses seeking exemption for a
retailing or distribution strategy involving RPM, particularly
where this would delay the launch of a new product.

8.7
Notification is available for other forms of vertical restriction,
including third line forcing, but is not available for RPM.
Notification is generally a quicker and less expensive means of
obtaining an exemption.

8.8
The Harper Review considered it prudent to retain a per se
prohibition on RPM, but recommended that notification be made
available for RPM. The Panel noted that the Commission could
withdraw the exemption if it considered that the
anti-competitive harm of the conduct outweighed any public
benefit.

8.9
The Harper Review also recommended that the prohibition on RPM
should not apply to related bodies corporate.

Summary of new law

8.10
Schedule 8 amends the resale price maintenance and notification
provisions to allow a corporation or person to notify the
Commission of RPM conduct, as an alternative to seeking
authorisation from the Commission for RPM conduct.

8.11
Schedule 8also provides an exemption from the RPM prohibition for
conduct between related bodies corporate.

Comparison of key
features of new law and current law

New
law

Current law

A corporation or
other person may notify the Commission of RPM
conduct.

Notification is
not available for RPM conduct.

Actions between
related bodies corporate do not constitute engaging in RPM
conduct.

Detailed explanation of new
law

Notification

8.12
Schedule 8 amends section 48 to provide that the prohibition
against RPM does not apply to a corporation or other person
engaging in conduct that constitutes RPM if the corporation or
other person has given the Commission a notice under section 93(1),
and that notice is in force. [Schedule 8, items 1 and 2, subsections 48(1) and
48(2)]

8.13
Section 93 is renamed to indicate that notification is now
available under that section for RPM conduct. Subsection 93(1) sets
out the types of conduct or proposed conduct for which a
corporation or other person may give a notice to the Commission.
Schedule 8 amends subsection 93(1) to include conduct of the kind
referred to in section 48 (that is, RPM). The subsection is also
split into two paragraphs for simplification. [Schedule 8, items 3 to 5, Subdivision A of
Division 2 of Part VII, subsection
93(1)]

8.14
Subsection 93(3A), which allows the Commission to give a written
notice to revoke a notification if it is satisfied that the public
benefits of the notified conduct will not outweigh the detriments,
is also amended to incorporate conduct of the kind referred to in
section 48. [Schedule 8, item 9, paragraph
93(3A)(a)]

8.15
Subsection 93(7A) is amended so that subsection 93(1) notices for
conduct referred to in section 48 come into force:

-
at the end of the period of 60 days, or such other period as is
prescribed by the regulations, starting on the day when the
corporation or other person gave the Commission notice; or

-
if the Commission gives notice to the corporation or other person
under subsection 93A(2) during that period - when the
Commission decides not to give the corporation or other person a
notice under subsection 93(3A). [Schedule 8, item 13,
subsection 93(7A)]

8.16
The latter timing applies where, within the initial 60 day or
otherwise prescribed period, the Commission issues a draft notice
proposing to revoke a notification under subsection 93(3A) and
invites the corporation and other interested persons to request a
conference with the Commission (under subsection 93A(2)) but then
decides not to give a notice under subsection 93(3A).

8.17
Subsections 93(7B) and 93(7C), respectively outline when certain
types of notifications do not come into force or cease to be in
force. Each of these subsections is amended to apply to conduct
under section 48 (that is, RPM). [Schedule 8, items 14 and 16, subsections 93(7B)
and 93(7C)]

8.18
Section 48 applies to a ‘corporation or other person’,
and so provisions of section 93 relating to section 48 are amended
to refer to a ‘corporation or other person’. Provisions
within section 93 relating to other sections of the Act remain
applicable to corporations only. The application of these other
sections to persons occurs through the operation of Schedule 1 to
the Act. [Schedule 8, items 6, 7, 8, 10,
11, 15, 17, 18, 19 and 20, subsections 93(2), 93(3A), 93(5), 93(6),
93(10) and 93A(2), paragraphs 93(2)(a), 93(3A)(a), 93(7C)(b),
93(8)(a) and 93(8)(b) and subparagraphs 93(7B)(b)(i) and
93(7B)(b)(ii)]

8.19
Section 93 is further amended by Schedule 9 to allow the Commission
to impose conditions on a notification for RPM conduct. If the
Commission reasonably believes that it would have grounds to give
the corporation or person a notice under subsection 93(3A) (that
the conduct is not approved), but that those grounds would not
exist if particular conditions relating to the proposed conduct
were complied with, then the Commission may impose those
conditions. [Schedule 9, item 7, section
93AAA]

8.20
If the Commission is satisfied that the corporation or other person
has failed to comply with those conditions, the Commission may at
any time revoke the RPM notification by issuing a written notice
that sets out the reasons the Commission is so satisfied.
[Schedule 9, item 6, subsection
93(3B)]

8.21 The decision of the
Commission to impose conditions on a notification given under
section 93 is subject to Tribunal review. If the person satisfies
the Tribunal either that the Commission would not have had grounds
to object to the notice under subsection 93(3A), or that the
conditions imposed would not have addressed those grounds, the
Tribunal must set aside the notice. If the Tribunal is not so
satisfied, it must affirm the notice. [Schedule 9, item 25, subsection
105(5AAB)]

8.22 The decision of the
Commission to revoke a notification, on the basis that a person has
not complied with conditions, is also subject to Tribunal review.
If a person satisfies the Tribunal that they have in fact complied
with the conditions, the Tribunal must set aside the notice
revoking the notification. If the Tribunal is not so satisfied, it
must affirm the notice. [Schedule 9, item 25, subsection
105(5AAA)]

8.23
Further amendments to the notification provisions are made by
Schedule 9 and detailed below in Chapter 9.

Related bodies corporate

8.24
A new subsection is added to section 96, so that the actions listed
in subsection 96(3) do not constitute engaging in RPM if the
supplier and second person are related bodies corporate.
[Schedule 8, item 21, subsection
96(8)]

8.25
This change reflects the general tenet of competition law that
companies within a corporate group are treated as a single economic
entity and are not considered to be competitors. This also brings
section 48 in line with the prohibitions in sections 45 and 47,
which do not apply to trading arrangements entered into between
related companies.

Consequential amendments

8.26
Schedule 8 makes a number of consequential amendments as a result
of providing for notification in respect of RPM, including to
provide that certain elements of section 93 should only apply to
notification for exclusive dealing, and not to RPM. [Schedule 8, items 2 and 12, subsections 48(2)
and 93(7)]

8.27
As a result of the repeal of the price-signalling provisions
detailed in Chapter 3, notification is no longer required for
price-signalling and section 93 is amended to remove any
reference to those provisions. [Schedule 8, items 5, 9, 13, 14 and 16,
subsections 93(1), 93(7A), 93(7B), and 93(7C) and paragraph
93(3A)(a)]

8.28 As a result of the removal
of the per se prohibition on third line forcing, and the change to
a competition-based test as detailed in Chapter 7, third line
forcing is removed from the subsections of section 93 which detail
additional or different requirements for conduct notified under
specified sections only. [Schedule 8, items 9, 13, 14 and 16, subsections
93(7A), 93(7B), 93(7C) and paragraph
93(3A)(a)]

8.29
Schedule 8 also makes amendments to Schedule 1 to the Act
corresponding with amendments made to the Act itself by Schedule 8.
These amendments to Schedule 1 of the Act apply the Schedule 8
changes to persons. [Schedule 8, items 22 and 23, section 48 of
Schedule 1 to the Act]

Context of amendments

9.2
Part VII of the Act covers authorisations (Division 1),
notifications (Division 2) and merger clearances and authorisations
(Division 3). While these processes have different features, each
provides an exemption from the application of Part IV of the
Act.

Simplification

9.3
The Harper Review considered that the authorisations and
notifications provisions were unnecessarily complex, generating
excessive regulatory and administrative costs and creating a focus
on technicalities over issues of substance.

9.4
The Harper Review recommended two principal changes to simplify the
authorisations and notifications provisions:

â¢
ensuring that only a single authorisation application is required
for a single business arrangement or transaction; and

â¢
empowering the Commission to grant authorisation on the basis that
the conduct would not be likely to substantially lessen
competition.

Mergers

9.5
Submissions to the Harper Review raised concerns about the
Commission’s formal merger clearance process and the merger
authorisation processes undertaken by the Tribunal. A merger
clearance can only be granted if the Commission is satisfied that
the merger will not substantially lessen competition. A merger
authorisation can only be granted if the Tribunal is satisfied that
there will be net public benefits from the merger.

9.6
The Harper Review noted that the formal clearance process has not
been used since it was introduced in 2007, and that the merger
authorisation process has been used only a few times since it was
reformed in 2007.

9.7
Unlike authorisations for other conduct prohibited under Part IV,
the Commission is not currently the decision-maker at first
instance for merger authorisations. Instead, the Tribunal makes the
decision at first instance and there is no avenue for review of
these decisions other than seeking judicial review by the Federal
Court.

9.8
The Harper Review recommended combining the formal clearance
process with the merger authorisation process to create a single,
streamlined authorisation process with the following
features:

â¢
the Commission should be the decision-maker at first instance (as
it is better suited to undertaking investigations);

â¢
the Commission should be empowered to authorise a merger if
satisfied the merger would not substantially lessen competition or
would result, or be likely to result, in a net public benefit;

â¢
the formal process should not be subject to prescriptive
information requirements, but the Commission should be empowered to
require the production of business and market information;

â¢
the formal process should be subject to strict timelines that
cannot be extended except with the consent of the merger
parties;

â¢
decisions of the Commission should be subject to review by the
Tribunal under a process that is also governed by strict timelines;
and

â¢
the review by the Tribunal should be based upon the material that
was before the Commission, but the Tribunal should have the
discretion to allow a party to adduce further evidence, or to call
and question a witness, if the Tribunal is satisfied there is
sufficient reason.

Class exemptions

9.9
The Harper Review recommended granting the Commission the power to
issue a ‘class exemption’ for business practices (types
or kinds of conduct) that are unlikely to generate competition
concerns, or are likely to generate a net public benefit. Such
exemptions would remove the need to make individual applications by
creating ‘safe harbours’ for business and thereby
reduce compliance and administration costs and increase
certainty.

Collective Bargaining

9.10
Collective bargaining by businesses may be detrimental to
competition and consumer welfare. Such behaviour may allow firms to
exploit consumers, force out competition, and reduce general
economic welfare. The same is true of collective boycotts, where a
bargaining group refuses to deal with suppliers or customers.
However, in certain circumstances collective bargaining conduct can
be beneficial for competition. Similarly, in some circumstances a
collective boycott can be an appropriate and useful tool to support
collective bargaining.

9.11
For example, small businesses will typically have less bargaining
power than one large supplier, putting them at a disadvantage in
individual negotiations. By negotiating as a collective, small
business may be able to negotiate with bargaining power equal to a
larger firm, and achieve a more efficient and pro-competitive
outcome.

9.12
The Harper Review considered that the collective bargaining
notification process is potentially of significant benefit to small
business and could be more widely used. It recommended reforms to
introduce greater flexibility into the collective bargaining
notification process, including:

â¢
enabling notifications to cover future members of the bargaining
group and multiple counterparties;

â¢
extending the time allowed for the Commission to consider
notifications involving collective boycotts before they come into
force; and

â¢
giving the Commission a ‘stop power’ to require
collective boycotts to cease in exceptional circumstances.

Summary of new law

9.13
Schedule 9 simplifies the various authorisation provisions into a
single authorisation provision that allows the Commission to
authorise conduct that would otherwise be prohibited under Part
IV.

9.14
Schedule 9also repeals the formal merger clearance and
authorisation processes contained in Division 3 of Part VII.
Mergers will now be subject to the general authorisation process in
section 88. Among other things, this means the decision-maker at
first instance for merger authorisations will change from the
Tribunal to the Commission.

9.15
Schedule 9 introduces a ‘class exemption’ power,
allowing the Commission to exempt conduct or categories of conduct
if it is unlikely to raise competition concerns or is likely to
generate net public benefits.

9.16
Schedule 9 also amends the notification process for collective
bargaining, including by allowing the Commission to impose
conditions on notifications which include collective boycott
activity, and granting the Commission the power to issue a
‘stop notice’ requiring collective boycott conduct to
cease.

Comparison of key
features of new law and current law

New
law

Current law

The
Commission can grant an authorisation if it is satisfied that
conduct:

- will not
(or is not likely to) substantially lessen competition
or

- is likely
to result in a net public benefit.

The
Commission can grant an authorisation only if it is satisfied the
conduct is likely to result in a net public
benefit.

There is a
single authorisation provision for all types of authorisations,
with some procedural differences between merger and
non-merger authorisations.

There are
separate authorisation provisions applying to mergers and other
types of authorisations.

The
decision-maker at first instance for merger authorisations is the
Commission.

The
decision-maker at first instance for merger authorisations is the
Tribunal.

No separate
merger clearance provision.

The
Commission can grant a merger clearance if it is satisfied the
merger will not (or is not likely to) substantially lessen
competition.

The
Commission’s determination on a merger authorisation is
subject to merits review by the Tribunal.

The
Tribunal’s determination on a merger authorisation is not
subject to merits review.

The
Commission may impose conditions on collective boycott and RPM
notifications.

The
Commission can only approve or reject collective boycott
notifications. Notification is not available for RPM
conduct.

A collective
boycott must cease when the Commission gives a ‘stop
notice’.

There is no
provision for a ‘stop notice’.

Detailed explanation of new
law

Repeal of the formal merger clearance and
authorisation processes

9.17
Schedule 9 broadly adopts the recommendations of the Harper Review
in relation to merger authorisations, with some slight differences
in detail as discussed below.

9.18
Schedule 9 repeals the existing Division 3 of Part VII. This
includes the formal merger clearance process, and the separate
merger authorisation process. [Schedule 9, item 22, Division 3 of Part
VII]

9.19
The general authorisation provisions are amended to incorporate
merger authorisations and also to simplify the provisions.

9.20
The following paragraphs outline the authorisation process as
applicable to all authorisations, followed by detail of several
provisions which are specific to merger authorisations.

Simplification of the general authorisation
process

9.21
Schedule 9 significantly simplifies the authorisation provisions by
removing separate provisions applicable to specific types of
authorisations, and instead including a single provision under
which conduct may be authorised (section 88) and a single test for
authorisation (section 90).

9.22
The following paragraphs explain the operation of the amended
provisions, which apply to all types of authorisations (both merger
and non-merger). Except as described below, these amendments are
not intended to change the authorisation process itself. Rather,
they are intended to reduce the complexity of the provisions of the
Act that set out the authorisation process.

Power to grant
authorisation

9.23
Section 88 no longer contains several provisions allowing
authorisation to be granted for different types of conduct
prohibited by Part IV. Instead, subsection 88(1) allows the
Commission to grant an authorisation to a person to engage in
conduct to which one or more provisions of Part IV would or might
apply. This power is discretionary and is exercisable on
application by a person. [Schedule 9, item 1, subsection
88(1)]

9.24
The power to grant authorisation under section 88(1) now extends to
conduct under section 46 (misuse of market power) and
section 50 (mergers).

9.25
The Commission may grant a single authorisation for several types
of conduct, or separate authorisations for any of the conduct to
which the application relates. [Schedule 9, item 1, subsection
88(5)]

9.26
‘Engage in conduct’ is defined in subsection 4(2) of
the Act as ‘doing or refusing to do any act’. Although
subsection 4(2) of the Act does not expressly include the
acquisition of shares or assets, these are ‘acts’ and
mergers may now be authorised under section 88 on the basis that
sections 50 or 50A, which are contained in Part IV, would or might
apply to such acquisitions.

9.27
The Commission may still only prospectively authorise conduct. The
Commission does not have the power to grant authorisation for past
conduct, that is, conduct (including mergers) engaged in before the
Commission determined the application for authorisation. This
replaces the former subsections 88(6B), (8D) and (12) with a
general rule for all types of authorisation. [Schedule 9, item 1, subsection
88(6)]

Authorisation subject to
conditions

9.28
The Commission may continue to grant an authorisation subject to
conditions specified in the authorisation, and the protection of an
authorisation does not apply if any of the conditions are not
complied with. [Schedule 9, item 1, subsection
88(3)]

9.29
For example, where a merger authorisation is granted on the basis
of a condition that is to be complied with before the merger takes
place, and the merger is completed without the condition having
been complied with, the merger will not be in accordance with the
authorisation. This means the merger will not benefit from the
protection afforded by the authorisation and the merger may
contravene section 50.

9.30
The ability to grant an authorisation subject to conditions allows
the Commission to address elements of the conduct which are a cause
for concern, rather than denying the application outright on the
basis of those concerns.

Effect of an
authorisation

9.31
While an authorisation is in force, the provisions of Part IV
specified in the authorisation do not apply to the conduct
specified in the authorisation, to the extent it is engaged in
by:

â¢
the applicant;

â¢
any other person named or referred to in the application as a
person who is engaged in, or proposed to be engaged in, the
conduct; and

â¢
any particular person or class of persons, as specified in the
authorisation, who become engaged in the conduct. [Schedule 9, item 1, subsection
88(2)]

9.32
An authorisation provides protection only for the conduct and
provisions specified in that authorisation. This protection does
not extend to conduct not specified in the authorisation or to
provisions of Part IV that may also apply to the conduct but which
have not been specified in the authorisation.

Applications for
authorisation

9.33
An application for authorisation must specify both the relevant
conduct that is to be engaged in, and the provisions of Part IV
that would or might apply to the specified conduct. [Schedule 9, item 1, subsection
88(1)]

9.34
Where a single application for authorisation deals with a merger
and other conduct under Part IV, the application is only considered
to be a ‘merger authorisation’ insofar as it relates to
the merger. Where the procedure for merger authorisations differs
from the procedure for non-merger authorisations, the
procedure applicable to each type of authorisation applies to the
corresponding component of the authorisation.

9.35
The requirements for an application for authorisation (including a
minor variation, revocation or revocation and substitution) are set
out in subsection 89(1). Schedule 9 to the Bill removes the
requirement that the application must be in the form prescribed by
the regulations, and instead requires that the application be in
the form approved by the Commission in writing. An application must
be accompanied by any other information or documents required by
the form. [Schedule 9, item 77, paragraph
89(1)(a)]

9.36
This change introduces greater flexibility into the authorisation
process by allowing the Commission to determine which information
is likely to be required to assess proposed conduct.

9.37
The application fee will continue to be prescribed by the
regulations.

9.38
The applicant may withdraw their application for authorisation at
any time, by writing to the Commission. [Schedule 9, item 1, subsection
88(7)]

Test for authorisation

9.39
Section 90 is amended to incorporate merger authorisations and
simplify the provision. It no longer contains separate tests for
granting authorisation for different types of conduct prohibited by
Part IV.

9.40
Subsection 90(7) now contains a single ‘authorisation
test’ which applies to all types of authorisations. The new
test provides that the Commission must not grant an authorisation
unless it is satisfied in all the circumstances either:

â¢
that the conduct would not have the effect, or would not be likely
to have the effect, of substantially lessening competition; or

â¢
that the conduct would result, or be likely to result, in a benefit
to the public which would outweigh the detriment to the public that
would result, or be likely to result, from the conduct.
[Schedule 9, item 3, subsection
90(7)]

9.41
The first limb of the test is a new basis for granting
authorisation. The second limb is consistent with the tests
previously contained in section 90.

9.42
Section 90(8) specifies that the first limb is not applicable to
the extent that the conduct specified in an application for
authorisation is prohibited on a per se basis. [Schedule 9, item 3, subsection
90(8)]

9.43
This means that authorisations for cartel conduct (Division 1 of
Part IV), secondary boycotts (sections 45D or 45DB) or resale price
maintenance (section 48) may only be granted if the Commission is
satisfied of the second limb of the test.

9.44
This avoids a mismatch between the basis on which the conduct is
prohibited, which does not look to whether the purpose, effect or
likely effect of the conduct is a substantial lessening of
competition, and the basis on which authorisation for that conduct
may be granted.

Power to seek additional
information

9.46
Currently, the Commission may consult with interested parties
before making an authorisation determination. Under section 90(2),
it is required to take all submissions received from the applicant,
the Commonwealth, a State or any other person into account.

9.47
The new subsection 90(6) replaces 90(2) and explicitly provides
that the Commission may invite written submissions from interested
persons within a specified period, and give the applicant or
another person written notice to provide further or particular
information, or consult with persons as reasonable and appropriate.
The Commission may consult with persons as it considers reasonable
and appropriate [Schedule 9, item 3, subsection
90(6)]

9.48
The new subsection 90(6A) provides that before making its
determination, the Commission must take into account submissions
and information received under subsection 90(6) within the period
specified in the written notice (if any), but is not required to
take into account submissions and information received after the
specified period. This does not prevent the Commission taking such
information into consideration if it wishes to do so. [Schedule 9, item 3, subsection
90(6A)]

Period for consideration and default
determination

9.49
Schedule 9 does not change the period for consideration, or default
determination, of a non-merger application. Under subsection
90(10), if the Commission does not determine an application for a
non-merger application within the ‘relevant
period’ (as set out in subsection 90(10A)), it is taken to
have granted the authorisation.

Tribunal review of general
authorisations

9.50
Currently, a person dissatisfied with a Commission authorisation
determination may apply to the Tribunal for a review under section
101 of the Act. Schedule 9 continues the position that the Tribunal
conducts a rehearing of non-merger authorisations. [Schedule 9, item 118,
subsection 101(2)]

Minor variation, revocation, and revocation and
substitution

9.51
Sections 91A, 91B and 91C, respectively, deal with minor
variations, revocation, and revocation and substitution of an
authorisation. Schedule 9 sets out powers of the Commission and the
requirements related to these processes. The powers and
requirements are broadly consistent with those that apply for the
original application for authorisation.

9.52
Subsection 91A(4) is amended so that the test for granting a minor
variation of an authorisation corresponds to the new test applying
to the original grant of authorisation.

9.53
If the Commission granted the authorisation on the grounds (in
paragraph 90(7)(a)) that the conduct would not, or would not be
likely to substantially lessen competition, then it must not grant
the minor variation unless it is satisfied in all the circumstances
that the variation would not, or would not be likely to increase
the extent to which the conduct lessens competition. [Schedule 9, item 92, paragraph
91A(4)(a)]

9.54
If the Commission granted the authorisation on the grounds (in
paragraph 90(7)(b)) that the conduct would, or would be likely to
generate a net public benefit, then it must not grant the minor
variation unless it is satisfied in all the circumstances that the
variation would not, or would not be likely to, reduce the net
public benefit of the conduct. [Schedule 9, item 92, paragraph
91A(4)(b)]

9.55
Subsection 91A(4A) makes clear that this test does not require the
Commission to complete a fresh assessment of the conduct in its
entirety. The Commission need not have regard to conduct that is
unaffected by the variation. This is intended to ensure the focus
is on the effect of the minor variation, and to ensure applications
for minor variations can be efficiently determined by the
Commission. [Schedule 9, item 92, subsection
91A(4A)]

9.56
Prior to making its determination in relation to a minor variation,
revocation or revocation and substitution of an authorisation the
Commission may seek additional information from, or consult with,
persons in accordance with subsection 90(6). The requirements for
the Commission to consult in relation to a minor variation,
revocation or revocation and substitution of an authorisation are
included elsewhere in sections 91A, 91B and 91B. [Schedule 9, items 92 to 94, subsections 91A(2A),
91B(3A), 91B(3B), 91C(3A) and
91C(3B)]

9.57
Subsections 91A(3), 91B(4) and 91C(4) respectively set out the
information the Commission must consider before it may make a
determination granting or refusing a minor variation, revocation or
revocation and substitution. Where the Commission seeks certain
information within a specified period, because of the application
of subsection 90(6) to section 91A, 91B or 91C, the Commission is
only required to consider information received within that period.
The Commission may consider late information if it wishes to do so.
[Schedule 9, items 92 to 94, subsections
91A(3), 91B(4) and 91C(4)]

9.58
The tests for revocation and revocation and substitution of an
authorisation remain the same, although minor amendments are made
within sections 91B and 91C to reflect the other amendments made by
Schedule 9 (such as the move to a single test for authorisation
under subsection 90(7)). [Schedule 9, items 93 and 98, subsections 91B(5)
and 91C( 7)]

Merger authorisations

9.59
The paragraphs below refer to merger authorisations generally,
except where they distinguish between domestic and overseas merger
authorisation.

New defined terms

9.60
The definition of ‘clearance’ is repealed, as merger
clearances no longer exist under the Act. [Schedule 9, item 28, subsection
4(1)]

9.61
Similarly, the definition of ‘authorisation’ is amended
to reflect the repeal of Division 3 of Part VII. [Schedule 9, item 27, subsection
4(1)]

â¢
an authorisation for a person to engage in conduct to which section
50 or 50A would or might apply; but

â¢
not authorisation for a person to engage in conduct to which any
provision of Part IV, other than section 50 or section 50A, would
or might apply. [Schedule 9, item 29, subsection
4(1)]

9.64
An overseas
merger authorisation is defined to mean a merger
authorisation that is not an authorisation for conduct to which
section 50 would or might apply. By implication, a merger
authorisation that is not an overseas merger authorisation is a
‘domestic merger authorisation’. [Schedule 9, item 29, subsection
4(1)]

9.65
A domestic
merger authorisation is an authorisation that is not
an overseas merger authorisation. [Schedule 9, item 122, paragraph
102(1AA)(1)(a)]

Authorisation subject to
conditions

9.66
The Commission may make it a condition of granting a merger
authorisation that a person must give, and comply with, an
undertaking under section 87B. If the person does not comply with
this condition, the protection of the merger authorisation will not
apply. Subsection 87B(4) sets out additional consequences for
failure to comply with a section 87B undertaking. [Schedule 9, item 1, subsection
88(4)]

9.67
The application form for a merger application, as approved by the
Commission, may contain a section 87B undertaking not to make the
acquisition while the Commission is considering the application.
[Schedule 9, item 78, subsection
89(1AA)]

Period for consideration and default
determinations

9.68
Given their commercial sensitivity, the Act sets shorter timeframes
for considering merger authorisations than for non-merger
authorisations. Schedule 9 preserves the existing period for
consideration of a domestic merger authorisation, as well as the
default position in the event the Commission has not made a
determination by the end of that period.

9.69
Under subsection 90(10B), the Commission has 90 days to determine a
domestic merger authorisation, beginning on the day the Commission
receives the application. [Schedule 9, item 82, subsection
90(10B)]

9.70
The 90 day period may be extended under subsection 90(12) if the
applicant informs the Commission in writing, before the end of the
initial 90 day period (or other base period as applicable), that
they agree to the Commission taking a specified longer period.
[Schedule 9, item 84, subsection
90(12)]

9.71
If the Commission has not determined an application for a domestic
merger authorisation by the end of the 90 day period (or the longer
period, if extended under subsection 90(12)), the Commission is
taken to have refused the application. [Schedule 9, item 82, subsection
90(10B)]

9.72
Similarly, no changes are made to the timing for, or default
decision on, overseas merger authorisations under subsection
90(11). The Commission continues to have 30 days, from the day on
which the application is received, to determine the application. If
the Commission has not determined an application for an overseas
merger authorisation by the end of the 30 day period, the
Commission is taken to have granted the application.

Period for determining minor variations,
revocations or revocation and substitutions of domestic merger
authorisations

9.73
Subsections 90(10B), 90(12) and 90(13) carry over the timing for
determining an original application for a domestic merger
authorisation to an application for a minor variation, revocation
or revocation and substitution of that domestic merger
authorisation. [Schedule 9, items 82, 92, 93 and
99, subsections 91A(5), 91B(5) and
91C(7A)]

9.74
This means that the Commission will be deemed to have refused to
grant the minor variation, revocation or revocation and
substitution if it has not determined the application within 90
days (or longer period if extended in accordance with those
subsections).

9.75
This does not apply in relation to overseas merger
authorisations.

Tribunal review of merger
authorisations

9.76
The Tribunal may review a determination of the Commission in
relation to:

â¢
an application for a merger authorisation;

â¢
an application for a minor variation of a merger authorisation;

â¢
an application for, or the Commission’s proposal for, the
revocation of a merger authorisation; and

â¢
an application for, or the Commission’s proposal for, the
revocation of a merger authorisation and the substitution of
another merger authorisation. [Schedule 9, items 118 and 128, subsections
101(2) and 102(8)]

9.77
Under subsection 101(2), the Tribunal’s review is not a
rehearing of the matter where it relates to a determination of any
of these applications. [Schedule 9, item 118, subsection
101(2)]

9.78
Subsection 102(10) provides that when conducting a review in
relation to a domestic merger authorisation, the Tribunal must not
have regard to any information, documents or evidence other
than:

â¢
information referred to in the Commission’s reasons for its
determination;

â¢
any information or report given to the Tribunal under subsection
102(6);

â¢
the information, documents or evidence referred to in subsection
102(7);

â¢
information given to the Tribunal as a result of the Tribunal
seeking such information, and consulting with such persons, as it
considers reasonable and appropriate for the sole purpose of
clarifying the information, documents or evidence referred to in
subsection 102(7); and

9.79
Subsection 102(9) grants the Tribunal a power to allow a person to
provide new information, documents or evidence that the Tribunal is
satisfied was not in existence at the time of the
Commission’s determination. This allows the Tribunal to take
account of a change in circumstances that has occurred since the
Commission’s determination. For example, if there is a new
entry to the relevant market after the Commission’s
determination is made, the Tribunal may allow a person to provide
new information about the entrant so this change in circumstances
can be taken into account in the Tribunal’s review.
[Schedule 9, item 128, subsection
102(9)]

9.80
The limitations on the information that may be considered by the
Tribunal appropriately balance the interests of all parties to a
review of a merger authorisation matter. In particular, they are
intended to ensure that applicants for merger authorisation provide
the Commission with all relevant material at the time of the
application, and do not delay production of that material until
later in the process or until Tribunal review. The limitations also
facilitate the Tribunal conducting its review expeditiously, given
the time sensitive nature of merger transactions.

9.81
Subsection 102(9) ensures that the parties to an application for
review are not unfairly prejudiced by the limitations of the
Tribunal review where there is genuinely new relevant information,
documents or evidence that was not in existence at the time of the
Commission’s determination.

9.82
Subsection 102(1AA) provides that the Tribunal must determine an
application for review of a domestic merger authorisation within
the relevant
period . This ‘relevant period’ is 90
days, beginning on the day the Tribunal receives the application,
unless:

â¢
the Tribunal allows new information, documents or evidence under
subsection 102(9), in which case the period is extended to 120
days. This extension allows the Tribunal sufficient time to
consider the new material.; or

â¢
the Tribunal determines in writing before the end of the initial 90
or 120 day period (as applicable) that the matter cannot be dealt
with properly within that initial period, either due to its
complexity or other special circumstances, and that an extended
period of up to a further 90 days in addition to the initial period
applies. [Schedule 9, item 122,
subsections 102(1AA), 102(1AC) and
102(1AD)]

9.83
If the Tribunal determines to extend its period of consideration
under subsection 102(1AD), it must notify the applicant and the
Commission of the determination before the end of the initial 90 or
120 day period (as applicable). [Schedule 9, item 122, paragraph
102(1AD)]

9.84
If the Tribunal does not make a determination on a domestic merger
authorisation matter within the applicable period, it is taken to
have affirmed the Commission’s determination. [Schedule 9, item 122, subsection
102(1AB)]

9.85
Schedule 9 continues the requirement that the Tribunal must make a
determination on the review of overseas merger authorisations
within 60 days unless it considers that the matter cannot be dealt
with properly within that period (in accordance with subsection
102(1AA)).

Providing false or misleading
information

9.86
A new section 92 replaces former section 95AZN. Section 92
prohibits a person giving false or misleading information to the
Commission or Tribunal under Division 1 of Part VII or Part XIB, in
connection with:

â¢
an application for merger authorisation;

â¢
an application for a minor variation of a merger authorisation;

â¢
an application for, or the Commission’s proposal for, the
revocation or revocation and substitution of a merger
authorisation; or

â¢
the Tribunal’s review in relation to any of the above
applications or proposals. [Schedule 9, item 100, subsection
92(1)]

9.87
Section 92 will be contravened where a person is negligent as to
whether the information is false or misleading in a material
particular. The requirement of negligence will also be satisfied by
proof that the person knew, or was reckless as to whether, the
information was false or misleading in a material particular.
[Schedule 9, item 100, subsection
92(2)]

Class exemption power

9.89
Schedule 9 inserts a new Division 3 of Part VII that allows the
Commission to create class exemptions for particular kinds of
conduct, so as to create ‘safe harbours’ for business
and thereby reduce compliance and administration costs associated
with individual authorisations. [Schedule 9, item 22, Division 3 of Part
VII]

9.90
The new subsection 95AA grants the Commission a power to determine
that one or more specified provisions of Part IV do not apply to
conduct of a kind specified in the determination. [ Schedule 9, item 22, section
95AA]

9.91
Parties will need to self-assess whether their conduct falls
within a class exemption.

Test for determination of a class
exemption

9.92
The Commission may only determine a class exemption if it is
satisfied in all the circumstances that conduct of that type
satisfies one limb of the two-limb test in subsection 95AA(1). That
is, that the conduct of that kind would:

â¢
not have the effect or would not be likely to have the effect, of
substantially lessening competition; or

â¢
result, or be likely to result, in a benefit to the public which
would outweigh the detriment that would result, or be likely to
result, from the conduct. [Schedule 9, item 22, subsection
95AA(1)]

9.93
This test for the Commission to determine a class exemption is
therefore the same as the test that the Commission would apply when
authorising a particular instance of conduct. Parties will need to
self-assess whether their conduct falls within a particular class
exemption.

Form of a class exemption

9.94
A class exemption is a legislative instrument within the meaning of
section 8 of the Legislation Act
2003 , and must be registered on the Federal Register of
Legislation. [ Schedule 9, item 22, subsection
95AA(1)]

9.95
Under subsection 33(3) of the Acts Interpretation Act 1901 , the
Commission’s power to make a class exemption includes a power
to revoke or vary a class exemption. The power to revoke or vary a
class exemption is subject to the same conditions as the power to
make the initial class exemption, including that the Commission
must be satisfied with respect to the matters listed in subsection
95AA(1). [ Schedule 9, item 22, note at
subsection 95AA(1)]

9.96
It is expected that the Commission will conduct appropriate
consultation prior to any decision to vary or revoke a class
exemption.

When a class exemption commences and ceases to
be in force

9.97
A class exemption enters into force on the day it is made or a
later date as specified in the determination. A class exemption
remains in force until the end of the period specified in the
determination, or until the Commission revokes the determination
(whichever is earliest). [Schedule 9, item 22, subsection
95AA(4)]

9.98
To ensure that class exemptions remain relevant and appropriate,
the Commission’s determination must specify a period for
which the class exemption is to be in force. This period cannot be
more than 10 years, which is consistent with the general rule in
the Legislation Act
2003 that legislative instruments automatically
‘sunset’ after they have been in force for 10 years.
[Schedule 9, item 22, subsection
95AA(3)]

Limitation and withdrawal of the benefit of a
class exemption

9.99
A class exemption exempts ‘conduct of a kind’ rather
than a particular instance of that conduct. As a result, the
Commission may not be made aware of, be able to anticipate, every
circumstance of future conduct to which the exemption may apply
before it determines a class exemption. As a result, there may be
some circumstances in which it would not be appropriate for
particular conduct to be exempted, despite falling within the class
exemption.

9.100
Where the Commission does identify particular circumstances in
which a class exemption should not apply, it may specify a number
of limitations. These limitations allow the Commission to restrict
the application of the class exemption to:

9.101
Where the Commission later forms the view, based on the facts and
circumstances of a particular case, that the class exemption should
not apply in that particular case, section 95AB allows the
Commission to withdraw the benefit of a class exemption in that if
it is satisfied that the particular conduct would not meet either
of the two limbs of the test in subsection 95AA(1). [Schedule 9, item 22, subsection
95AB(1)]

9.102
To withdraw the benefit of the class exemption in a particular
case, the Commission must give a person written notice and must, in
or with the notice, give a written statement of its reasons for
withdrawing the benefit of the class exemption. [Schedule 9, item 22, subsections 95AB(1) and
95AB(2)]

9.103
A notice of withdrawal comes into force when the Commission gives
it to the person, and therefore the benefit of a class exemption
can only be withdrawn on a prospective basis. The Commission cannot
retrospectively withdraw the benefit of a class exemption.
[Schedule 9, item 22, paragraph
95AB(4)(a)]

9.104
While a notice of withdrawal is in force, the class exemption does
not apply to the specified conduct engaged in by the recipient of
the notice. [Schedule 9, item 22, subsection
95AC(3)]

9.105
A notice of withdrawal ceases to be in force (and the benefit of
the class exemption is reinstated) at the earliest of the following
times:

â¢
if the Tribunal sets aside the notice under subsection 102(5G), at
the end of the day the Tribunal sets it aside;

Tribunal review in relation to a class
exemption

9.106
As a class exemption is a legislative instrument, it is subject to
disallowance by Parliament. The Commission’s decision to
determine the class exemption is not subject to merits review by
the Tribunal.

9.107
However, the Commission’s decision to withdraw the benefit of
a class exemption in a particular case is reviewable by the
Tribunal. A person dissatisfied with the giving of a notice under
section 95AB may apply to the Tribunal for a review. An application
for review must be made within the time prescribed under the
regulations. The Tribunal must review the giving of the notice if
the applicant for review is the recipient of the notice or the
Tribunal is satisfied the person has a sufficient interest.
[Schedule 9, item 23, subsection
101B]

9.108
The Tribunal must make a determination setting aside the notice of
withdrawal if the applicant for review satisfies the Tribunal that
the conduct specified in the notice of withdrawal would satisfy one
of the limbs of the test in subsection 95AA(1). [Schedule 9, item 26, paragraph
102(5G)(a)]

9.109
If the Tribunal is not so satisfied, then it must make a
determination affirming the Commission’s notice of
withdrawal. [Schedule 9, item 26,
paragraph 102(5G)(b)]

Collective bargaining notifications and
collective boycott conduct

9.110
Schedule 9 makes a number of changes to the provisions related to
the notification of collective bargaining and collective boycotts,
in order to make the notification process easier and allow greater
flexibility in the bargaining process, particularly for small
businesses.

New defined term

9.111
A definition of collective boycott
conduct is inserted into subsection 4(1), to mean
conduct that has a purpose referred to in subsection 44ZZRD(3) in
relation to a contract, arrangement or understanding. This
definition applies across the Act, wherever there is a reference to
‘collective boycott conduct’. [Schedule 9, item 29, subsection
4(1)]

Scope of a collective bargaining
notification

9.112
A corporation may give a notification of collective bargaining
conduct, if the requirements of section 93AB are satisfied. A
notice of collective bargaining may include collective boycott
conduct. [Schedule 9, item 17, paragraph
93AD(1)(a)]

9.113 A new subsection 93AB(7A) is
inserted, to allow the protection of a collective bargaining notice
to extend to include people who join the bargaining group after the
notice is given to the Commission. However, future members are only
covered if the notice is expressed in such a way as to allow future
members, and if those future members could have given the notice on
their own behalf at the time they became members of the collective
bargaining group. [Schedule 9, items 14 and 17 to 19, subsections
93AD(3)(note) and 93AB(7A), and paragraphs 93AD(1)(a) and
93AD(3)(c)]

9.114 This means that, at the time
of joining the bargaining group, the relevant future member(s) must
meet the requirements set out in
section 93AB.

9.115 These amendments ensure that
the protection afforded by a collective bargaining notification can
be appropriately extended if the membership of the bargaining group
changes.

9.116 Amendments are also made
throughout section 93AB to allow one notice by the bargaining group
to deal with multiple counterparties. This removes the need for the
group to give the Commission separate notices for each counterparty
it intends to deal with. [ Schedule 9, items 8 to 13, subsections 93AB(2) to
93AB(4) and paragraphs 93AB(4)(a) and
93AB(4)(b)]

Commission may impose
conditions on a collective bargaining
notification

9.118 The Commission may only
impose conditions where it reasonably believes that it would have
grounds to issue an objection notice relating to the collective
bargaining notification, but that those grounds would not exist if
particular conditions relating to the proposed conduct were
complied with. The Commission may only impose conditions that would
remove the grounds for issuing an objection
notice. [Schedule 9, item 16, subsection
93ACA(1)]

9.119 The Commission must impose
the conditions by written notice, and must give the corporation a
written statement of its reasons for imposing the
conditions. [Schedule 9, item 16, subsection
93ACA(2)]

9.120 The Commission’s
decision to impose conditions on a collective bargaining notice
(which includes collective boycott conduct) is reviewable by the
Tribunal. If the person satisfies the Tribunal either that the
Commission would not have had grounds to object to the notice, or
that the conditions imposed would not have addressed those grounds,
the Tribunal must set aside the notice. If the Tribunal is not so
satisfied, it must affirm the notice. [Schedule 9, item 26, subsection
102(5D)]

9.121 If the Commission imposes
conditions on a collective bargaining notice which includes
collective boycott conduct, and the Commission is satisfied the
corporation has failed to comply with those conditions, the
Commission may give the corporation an objection
notice. [Schedule 9, item 15, subsection
93AC(2A)]

9.122 If the Commission gives an
objection notice under subsection 93AC(2A), this is reviewable by
the Tribunal. If the Tribunal is satisfied that the person did not
fail to comply with the conditions, it must set aside the objection
notice and the notification remains effective. If the Tribunal is
not so satisfied, it must affirm the objection
notice. [Schedule 9, item 25, subsection
102(5AB)]

When a collective bargaining notice commences
and ceases to be in force

9.123 A collective bargaining
notice, which does not relate to collective boycott conduct, comes
into force 14 days after the corporation gives the Commission the
notice. The regulations may prescribe a longer or shorter period
than this. [Schedule 9, item 17, paragraph
93AD(1)(a)]

9.124 Where a collective
bargaining notice incorporates collective boycott conduct, it will
come into force 60 days after the corporation gave the Commission
the notice. The regulations may prescribe a longer or shorter
period. This longer period recognises the greater level of harm
that may be caused by collective boycott activity and the need to
allow the Commission a longer period to consult with relevant
parties and to consider the proposed conduct and whether to object
to the notice. [Schedule 9, item 17, paragraph
93AD(1)(a)]

9.125 A collective bargaining
notice ceases to be in force at the earliest of the following
times:

â¢ When it is withdrawn or
taken to be withdrawn; or

â¢ If the Commission gives the
Corporation an objection notice, 31 days after the ‘relevant
day’ (as set out in subsection 93AD(4)) or a later day
specified in writing by the Commission;
or

â¢ At the end
of:

- The period of three years,
beginning on the day the corporation gave the collective bargaining
notice; or

9.126 New subsection 93AD(5)
allows the Commission to determine an alternative period for a
collective bargaining notice to expire, if it determines that the 3
year period is not appropriate in all the circumstances. The
alternative period set by the Commission may be any period up to 10
years, beginning on the day the corporation gives the Commission
the collective bargaining notice. The Commission must give the
corporation a written notice determining the alternative period and
stating its reasons. [Schedule 9, item 20, subsections 93AD(5) and
93AD(6)]

9.127 The Commission’s
decision to set an alternate period under subsection 93AD(5) is
reviewable by the Tribunal. If the Tribunal is satisfied that the
default period of 3 years is appropriate in all the circumstances,
or the alternate period set by the Commission is not appropriate in
all the circumstances, it must set aside the notice under
subsection 93AD(5). If it is not so satisfied, it must affirm the
notice. [Schedule 9, item 26, subsection
102(5E)]

Stop notices for collective
boycott activity

9.128 Where a corporation has
given the Commission a notice of collective bargaining that relates
to collective boycott conduct, and that notice remains in force,
Schedule 9 grants the Commission a power to issue a ‘stop
notice’ requiring the collective boycott conduct to
cease. [Schedule 9, item 21, section
93AG]

9.129 A stop notice may only be
given by the Commission where the following conditions are
met:

â¢ there has been a material
change of circumstances since the Commission previously gave a stop
notice (if applicable) or since the collective bargaining notice
came into force; and

â¢ the Commission reasonably
believes that:

- the collective boycott
conduct has resulted in serious detriment to the public;
or

- serious detriment to the
public is imminent as a result of the collective boycott
conduct. [Schedule 9, item 21, subsection
93AG(1)]

9.130 This ensures that once a
notification is in force, the Commission has the flexibility to
respond to changing circumstances where the conduct poses harm
which is different to, or greater than, the actual or likely harm
that was apparent at the time of the notification. This allows the
Commission to intervene and stop serious, harmful conduct while it
prepares a final objection or conditions
notice.

9.131 The Commission must, at the
time it gives the corporation the stop notice, give the corporation
a written statement of its reasons for giving the stop
notice. [Schedule 9, item 21,subsection
93AG(2)]

9.132 The effect of a stop notice
is that the collective bargaining notification is taken not to be
in force under section 93AD and that the legal protection available
for a collective boycott is temporarily suspended, to the extent
the notification relates to collective boycott
conduct. [Schedule 9, item 21, subsection
93AG(3)]

9.134 The stop notice comes into
force at the time the Commission gives the corporation the stop
notice. [Schedule 9, item 21, subsection
93AG(4)]

9.135 The Commission may extend a
stop notice by up to 90 days, if it is satisfied that in all the
circumstances it is reasonable to do so. If the Commission extends
the stop notice, it must do so by giving the corporation a written
notice which must include, or be accompanied by, a written
statement of the Commission’s reasons for the
extension. [Schedule 9, item 21, subsections 93AG(7) and
93AG(8)]

9.136 The stop notice ceases to be
in force at the earliest of the following
times:

-
the end of 90 days (or the end of up to 180 days, if the Commission
extends the stop notice); or

-
when the Commission issues a final objection notice under
subsections 93AC(1) or 93AC(2); or

-
when the Commission issues notice under subsection 93ACA(1)
imposing conditions; or

9.137 The Commission’s
decision to issue a stop notice is not reviewable by the Tribunal.
This is because a stop notice can only be issued in order to
prevent actual or imminent serious detriment to the public. The
prevention of such detriment would be undermined by a merits review
process, which would divert the Commission’s resources away
from assessing the conduct itself and onto the review. The lack of
merits review is appropriate as a stop notice can only be in place
for a maximum of 90 days before the Commission must either: extend
the notice, issue a final objection notice or final conditions
notice, or withdraw the stop notice. A final objection notice or
final conditions notice is reviewable by the
Tribunal.

9.138 The Commission’s
decision to extend the stop notice is reviewable by the Tribunal
under subsection 102(5F). If the applicant for review satisfies the
Tribunal that in all the circumstances it was not reasonable to
extend the stop notice, the Tribunal must make a determination
setting aside the notice of extension. If the Tribunal is not so
satisfied, it must make a determination affirming the notice of
extension. [Schedule 9, item 26, subsection
102(5F)]

Consequential amendments

Notification
amendments

9.139
As detailed in Chapter 8, Schedule 9 makes consequential amendments
to the notification provisions of Part VII to reflect related
amendments detailed in this Chapter, Chapter 7 and Chapter 8
(allowing notification for RPM, allowing for conditions to be
imposed on RPM notifications, and simplifying the assessment of all
forms of exclusive dealing under a single test).

Radiocommunications Act
1992

9.140 Schedule 9 also makes
consequential amendments to provisions within Part 3.2 (Spectrum
Licences) and Part 3.3 (Apparatus Licences) of the
Radiocommunications Act 1992, to update references to provisions in
the Competition and Consumer Act 2010 (the Act) which are amended
by Schedule 9. [Schedule 9, items 164-167, sections 68A, 71A,
106A and 114A of the Radiocommunications Act
1992].

9.141 Sections 68A, 71A, 106A and
114A of the Radiocommunications Act 1992 currently refer to section
50 and subsections 81(1) and (1A) of the Act. However, since 2006
those provisions of the Radiocommunications Act 1992 have
incorrectly referred to authorisation provisions related to section
50A (overseas acquisitions) following amendments made by the Trade
Practices Legislation Amendment Act (No. 1) 2006.
Consequential amendments to the Radiocommunications Act 1992 were
overlooked at that time.

9.142 Those sections are repealed
and re-written with reference to Parts VII and IX of the Act.
Firstly, certain actions (the issue of, and authorisations under, a
spectrum licence or apparatus licence) are deemed to be an
‘acquisition’ and ‘conduct’ for the
purposes of certain provisions of the Act. Secondly, those
provisions of the Act are specified as section 50, subsections
81(1) and (1A), and Parts VII and IX to the extent that the
provisions of those Parts relate to section
50.

9.143 This ensures that where
certain actions under the Radiocommunications Act 1992 are brought
within the scope of the prohibition in section 50 of the Act, an
authorisation may be sought in relation to those
actions.

Commencement, application and transitional
provisions

9.146 Items 1 to 103 of Schedule 9
commence at the same time as Schedule 1. Item 104 commences
immediately after items 1 to 103. Items 105 to 132 commence at
the same time as Schedule 1. Item 133 commences immediately after
Schedule 1. Items 134 to 163 commence at the same time as Schedule
1.

Outline of chapter

10.1
Schedule 10 to this Bill extends section 83 of the Act so that a
party bringing certain proceedings may rely on both admissions of
fact and findings of fact made in certain other proceedings.

Context of amendments

10.2
Consumers or businesses harmed by a contravention of the
competition law can seek relief by commencing a private action
before the Federal Court (for example, a person may commence an
action for damages under section 82).

10.3
Section 83 of the Act is intended to facilitate private actions by
enabling findings of fact made in certain proceedings against a
corporation to be used as prima
facie evidence against that corporation in certain other
proceedings. For example, if the Commission brings an action
against a corporation seeking pecuniary penalties under section 77
or an injunction under section 80 for a contravention of the Act,
and during that proceeding the court makes a finding of fact, that
finding may be relied upon by a person later bringing a private
action.

10.4
This mechanism helps to reduce the cost of private actions, as a
person relying on a previous finding of fact as prima facie evidence does not need
to establish that fact.

10.5
Many proceedings brought by the Commission are resolved by a
corporation making admissions of fact that establish the
contravention. However, it is uncertain whether section 83 also
applies to admissions of fact, and the extent to which litigants in
subsequent proceedings may rely on these admissions.

10.6
The Harper Review noted this lack of clarity was an impediment to
the right to private enforcement of the competition law, and
recommended amending section 83 to clarify that it applies to
admissions of fact as well as findings of fact. This would enhance
the effectiveness of section 83 as a means of reducing the cost of
private actions, and thereby facilitating access to
justice.

Summary of new law

10.7
Schedule 10 amends section 83 so that a party bringing certain
proceedings (such as an action for damages under section 82) may
rely on both admissions of fact and findings of fact made in
certain other proceedings (such as an action by the Commission
seeking pecuniary penalties under section 77 or an injunction under
section 80).

Comparison of key
features of new law and current law

New
law

Current law

Admissions of fact
made by a person, and findings of fact made by a court, in certain
proceedings against a person may be used in certain other
proceedings against that person under the Act.

Findings of fact
made by a court in certain proceedings against a person may be used
in certain other proceedings against that person under the
Act.

Detailed explanation of new
law

10.8
The scope of section 83 is broadened so that where a person has
made an admission of fact in certain proceedings against that
person, and that person was found in those proceedings to have
contravened or been involved in a contravention of certain
provisions of the Act, that admission can be used as
prima facie evidence
of that fact in certain other proceedings against that person.
[Schedule 10, item 1, subsection
83(1)]

10.9
An admission of fact can only be used against the person who made
the admission. [Schedule 10, item 1, subsection
83(1)]

10.10
Both admissions of fact and findings of fact may be proved by a
document under the seal of the court from which the finding or
admission appears. Admissions of fact may also be proved by a
document from which the admission appears that is filed in the
court. [Schedule 10, item 1, subsection
83(2)]

10.11
Subsections 83(1) and (2) together ensure that admissions cannot be
relied upon as prima
facie evidence in subsequent proceedings unless they
have first been tested by a court and have therefore been taken
into consideration in that court finding that the person
contravened or was involved in a contravention of the
Act.

10.12 As with findings of fact, an
admission of fact proved in accordance with subsection 83(2) is
only prima
facie evidence of that fact,
meaning that the defendant is not precluded from producing contrary
evidence to disprove that fact.

10.13 Section 83 is also rewritten
for simplification. The operation of section 83 is not intended to
change except as detailed in this Chapter. [Schedule 10, item 1, section
83]

Commencement, application and transitional
provisions

10.14 Schedule 10 commences at the
same time as Schedule 1.

10.15
The amendments made by Schedule 10 only apply to admissions of fact
made on or after the commencement of the application provision in
Schedule 10. Admissions of fact made prior to the commencement of
this provision may not be relied on in subsequent proceedings,
irrespective of whether the proceedings commenced before or after
the commencement of Schedule 10 .This preserves the context in
which those admissions of fact were made and ensures that
admissions are made with knowledge of how those admissions may be
relied upon. [Schedule 10, item 2, application
provision]

Outline of chapter

11.1
Schedule 11 to this Bill extends the Commission’s power to
obtain information, documents and evidence in section 155 to cover
investigations of alleged contraventions of court enforceable
undertakings and merger authorisation determinations.

11.2
Schedule 11 also introduces a ‘reasonable search’
defence to the offence of refusing or failing to comply with
section 155, and increases the fine for non-compliance with section
155.

Context of amendments

Operation of section 155

11.3
The Commission’s primary investigative power is contained in
section 155. Given that the competition law is concerned with
regulating conduct which often occurs secretively, such as cartel
conduct, the Commission requires strong coercive powers to
investigate and uncover such contraventions.

11.4
A section 155 notice may be issued by the Commission in relation to
the matters specified in subsection 155(1), and may require a
person to furnish information to the Commission, to produce
documents to the Commission, or to appear before the Commission to
give evidence and produce documents.

11.5
Under subsection 155(5), a person shall not refuse or fail to
comply with a notice, or knowingly provide false or misleading
evidence or information. Subsection 155(6A) makes it an offence to
contravene subsection 155(5), and sets out the applicable maximum
fine or term of imprisonment upon conviction.

Scope of section 155

11.6
The Commission may accept a court-enforceable undertaking under
section 87B of the Act, or section 218 of the Australian Consumer
Law (Schedule 2 to the Act).

11.7
A section 155 notice may be issued by the Commission in relation to
a range of matters that are specified in subsection 155(1). The
investigation of an alleged contravention of a court-enforceable
undertaking is not currently a matter in relation to which a
section 155 notice may be issued.

11.8
The Harper Review recommended extending section 155 to cover the
investigation of alleged contraventions of court-enforceable
undertakings (that is, a breach of one or more terms of such an
undertaking).

11.9
The Harper Review considered that the ability to gather information
about a possible contravention of an undertaking accepted by the
Commission would assist in protecting the integrity of undertakings
as part of the broader compliance and enforcement framework.

Search for documents

11.10
As noted by the Harper Review, section 155 notices have been a
longstanding element of Australia’s competition law. The
power to compel the production of evidence, information and
documents is crucial to the Commission’s administration and
enforcement of the Act.

11.11
However, in the digital age, businesses retain many more documents,
such as emails, than in the past. Strict compliance with a section
155 notice may require an electronic search of tens of thousands of
documents, which can constitute a significant compliance cost.

11.12
In recognition of the increasing cost of documentary searches,
courts have modified the rights of discovery in recent years. For
example, the Federal Court Rules
2011 require a party to undertake a ‘reasonable
search’ for documents. Under the Rules , in making a reasonable
search, consideration may be given to factors such as the number of
documents to be searched and the ease and cost of retrieving a
document.

11.13
In light of these developments, the Harper Review recommended
introducing a ‘reasonable search’ defence to the
offence of a ‘refusal or failure to comply’ with a
section 155 notice.

Penalty for non-compliance with section
155

11.14
Subsection 155(6A) currently sets out that the maximum fine upon
conviction for an offence under section 155 is 20 penalty units for
an individual.

11.15
Under subsection 4B(3) of the Crimes Act 1914 , unless the contrary
intention appears and if the court thinks fit, the penalties for
corporations are five times that of individuals. Consequently, the
maximum pecuniary penalty under section 155 is 100 penalty units.
When applied to a corporation, this equates to a maximum fine of
$18,000 (at current penalty rates).

11.16
By comparison, the maximum pecuniary penalties for a corporation
failing or refusing to comply with similar notice-based
investigative powers are significantly higher. For example, section
63 of the Australian Securities
and Investments Commission Act 2001 applies a maximum
pecuniary penalty of 100 penalty units for individuals (which
equates to $90,000 for corporations, at current penalty rates).

11.17
The Harper Review noted that compliance with compulsory
investigative powers facilitates the Commission’s ability to
investigate competition concerns, and considered that the current
maximum penalty is inadequate. It recommended that the maximum
penalty for an offence under section 155 be increased, in line with
similar notice-based evidence-gathering powers of other
regulators.

Summary of new law

11.18
Section 155 is broadened, so that a notice may be issued in
relation to an alleged contravention of a court-enforceable
undertaking made to the Commission under section 87B or section 218
of the Australian Consumer Law or in relation to an application for
merger authorisation.

11.19
A defence is introduced to section 155, so that a person who is not
aware of the requested documents after undertaking a reasonable
search is taken not to have contravened subsection 155(5).

11.20
The maximum penalty for non-compliance with a section 155 notice is
increased.

Comparison of key
features of new law and current law

New
law

Current law

If a person has
refused or failed to comply with a notice to produce documents it
is a defence if, after a reasonable search, the person is not aware
of the documents.

No
equivalent.

A section 155
notice may be issued in relation to alleged contraventions of
court-enforceable undertakings given under section 87B of the
Act or section 218 of the Australian Consumer Law, and in relation
to a merger authorisation decision.

A section 155
notice may not be issued in relation to alleged contraventions of
court-enforceable undertakings.

The maximum
penalty for non-compliance with a section 155 notice is 100
penalty units or 2 years imprisonment (for an
individual).

The maximum
penalty for non-compliance with a section 155 notice is 20
penalty units or 12 months imprisonment (for an
individual).

Detailed explanation of new
law

Scope of section 155

11.21
Schedule 11 simplifies subsection 155(1) by moving provisions
relating to the scope of section 155 to a new subsection 155(2).
Schedule 11 also expands the scope of section 155 to allow the
Commission to give a notice in relation to:

â¢
matters that constitute, or may constitute, a contravention of the
terms of an undertaking accepted under section 87B of the Act or
section 218 of the Australian Consumer Law; or

â¢
a matter that is relevant to the Commission’s decision under
subsection 90(1) in relation to a merger authorisation.
[Schedule 11, item 2, subsection
155(2)]

11.22
The inclusion of merger authorisations follows the amendments to
the merger authorisation process, as detailed in Chapter
9.

11.23
These amendments assist in protecting the integrity of undertakings
as part of the broader compliance and enforcement framework of the
Act.

‘Reasonable search’
defence

11.24
Schedule 11 inserts a ‘reasonable search’ defence into
section 155 in relation to the failure or refusal to comply
with a notice requiring the production of documents.

11.25
A person will not have contravened paragraph 155(5)(a), and will
not be guilty of an offence under subsection 155(6A), to the extent
that:

â¢
the section 155 notice relates to producing documents;

â¢
after a reasonable search, the person is not aware of the
documents; and

â¢
the person provides a written response to the notice, including a
description of the scope and limitations of the search.
[Schedule 11, item 3, subsection
155(5B)]

Determining what constitutes a ‘reasonable
search’

11.26
In determining whether a search is reasonable, the following
factors may be taken into account:

-
the nature and complexity of the matter to which the notice
relates;

-
the number of documents involved;

-
the ease and cost of retrieving a document, relative to the
resources of the person who was given the notice; and

-
any other relevant matter. [Schedule 11, item 3, subsection
155(6)]

11.27 This list is not exhaustive
and does not limit the matters that may be taken into account in
determining whether a search is reasonable. It may be appropriate
for other factors to be considered under paragraph s155(6)(d),
‘any other relevant matter’. Such a relevant matter may
be, for example, the costs of document review relative to the
resources of the person who was given the notice, or whether the
Commission and the person agreed to the scope of the
search.

11.28 Whether a person has made a
reasonable search is an objective test. The defence will not be
established where the recipient of a section 155 notice
subjectively decides that it is not reasonable to conduct a search
at all, or has conducted only a limited search, if this falls short
of what would objectively be considered
reasonable.

Awareness of
documents

11.29
The recipient of a section 155 notice may only rely on the
reasonable search defence to the extent that, after a reasonable
search, the person is not ‘aware’ of the documents.

11.30
The defence will not be established where the recipient of a
section 155 notice chooses not to search for a document the person
is aware exists, or chooses not to produce a document that the
person is aware exists.

Written response to the
Commission

11.31
Under paragraph 155(5B)(c), a person may only rely on the
reasonable search defence if they have provided the Commission with
a written response to the section 155 notice. This written response
must include a description of the scope of the search which the
person undertook, and a description of the limitations of the
search. That is, the response must outline those factors which the
person considers made it unreasonable to search any further than
they searched or made it reasonable to limit the search in the way
they did. [Schedule 11, item 3, paragraph
155(5B)(c)]

11.32
The purpose of this requirement is to ensure the Commission has
sufficient information to make an assessment of whether it also
considers the person has conducted a reasonable search. Without
this requirement, the Commission’s first opportunity to test
the reasonableness of a person’s search would be in
proceedings against that person relating to an offence under
subsection 155(5)(a).

Burden of proof

11.33
The defendant bears a legal burden of establishing that they have
undertaken a reasonable search, which must be discharged on the
‘balance of probabilities’ (that is, the defendant must
establish, on the balance of probabilities, that they undertook a
reasonable search and after that reasonable search they were not
aware of the requested documents). [Schedule 11, item 3, note at subsection
155(5B)]

11.34
It is appropriate to cast the matter as a defence rather than as an
element of the offence, and to place a legal burden on the
defendant, because the facts amounting to a reasonable search will
be peculiarly within the knowledge of the defendant. For example,
it is likely that only a defendant will possess information such as
how many documents could possibly have been searched to find the
documents the notice requested, and how many documents were
actually searched.

11.35
With this knowledge, the defendant could readily and cheaply
provide evidence to establish, on the balance of probabilities,
that they conducted a reasonable search.

11.36
By contrast, it would be extremely difficult and costly for the
prosecution to gather the same evidence through its own
investigations. This would constitute a significant hurdle for the
prosecution and allow the new defence to undermine the integrity of
section 155, particularly given the breadth of matters which may be
relevant to determining whether the search conducted by the
defendant constitutes a ‘reasonable search’.

11.37
Moreover, once the defendant meets their legal burden, the
prosecution must still disprove the defence beyond a reasonable
doubt in order to establish a contravention of paragraph 155(5)(a).
This is a significantly higher standard to meet than a balance of
probabilities.

11.38
The introduction of this defence, which has not previously been
available to defendants facing prosecution under section 155, is
only made possible and viable by placing the legal burden on the
defendant.

Penalty for non-compliance with section
155

11.39
The maximum penalty for a contravention of section 155(5) is
increased to 100 penalty units (500 penalty units for corporations)
or imprisonment for two years. [Schedule 11, item 4, subsection
155(6A)]

11.40
This aligns the penalty under section 155 with the penalty for
non-compliance with similar notice-based
evidence-gathering powers of other regulators.

Commencement, application and transitional
provisions

11.41 Schedule 11 commences at the
same time as Schedule 1.

11.42
Following the commencement of Schedule 11, section 155 notices that
were in force immediately before commencement continue in force,
and, with the exception of the increased penalty, the amended
section 155 applies in relation those notices as if they had been
issued under section 155 as amended. [Schedule 11, item 5, application
provision]

11.43
The effect of this is to allow the ‘reasonable search’
defence to be used for section 155 notices that were in force
immediately before the commencement of Schedule 11. However, the
increased penalty under subsection 155(6A) does not apply to
notices that were served prior to the commencement of Schedule 11.
[Schedule 11, item 5, application
provision]

Outline of chapter

12.1
Schedule 12 to this Bill amends Part IIIA of the Act, which
contains the National Access Regime (Regime), to ensure it better
promotes effective competition in dependent markets. It does this
by addressing the economic problem of an enduring lack of effective
competition in markets for nationally significant infrastructure
services.

Context of amendments

The economic problem addressed by the
Regime

12.2
The Regime provides a regulatory framework for third parties to
seek access to nationally significant infrastructure services that
are owned and operated by others.

12.3
The Regime promotes effective competition in dependent markets. It
achieves this by addressing the economic problem of natural
monopoly in markets for infrastructure services that face an
enduring lack of effective competition. Large, usually sunk, fixed
costs and economies of scale, which are typical characteristics of
natural monopoly, can serve as impediments to prospective
competitors entering the markets.

12.4
A provider may have the ability and incentive to deny access to a
service, or restrict output and charge monopoly prices, where there
is a lack of effective competition in markets for that service.
This can reduce economic efficiency where access to the service is
required for third parties to compete effectively in dependent
(upstream or downstream) markets. As a consequence, transactions
that would enhance community wellbeing may not proceed.

12.5
The Regime provides a means of promoting competition in dependent
markets, which rely on a service provided by nationally significant
infrastructure to compete effectively. As part of this, the Regime
considers if a facility owner is earning a commercial investment
return so as not to impair investment incentives.

The operation of the access
Regime

12.6
The Regime enables third parties to seek access to nationally
significant infrastructure services. It includes Part IIIA of the
Act, and clause 6 of the Competition Principles Agreement, that
sets out general principles to assess the effectiveness of State
and Territory access regimes.

12.7
A declaration under the Regime gives an access seeker the right to
negotiate access to a service provided by means of a facility.
Declarations are therefore limited to matters that are defined as a
service under s 44B. This includes the use of an infrastructure
facility, handling or transporting goods, or a communications
service.

12.8
The designated Minister is only able to make a declaration once
they have received a recommendation from the National Competition
Council (Council). The Council must be satisfied that the four
declaration criteria are met when making a recommendation to
declare a service. When considering the Council’s
recommendation, the Minister must be satisfied those same four
criteria are met, before deciding to declare a service. The
criteria determine when access regulation will and will not apply,
as they constrain the considerations of the Council and
Minister.

Developments in the past few
years

12.9
The declaration criteria have been examined in a number of cases
heard by both the Federal and High Courts. The declaration criteria
have been subject to several different interpretations in these
cases, with particular implications for how competition in
dependent markets should be assessed. For investment to continue to
be made in nationally significant infrastructure, it is important
that the Regime is easily understood, creates outcomes that are
predictable and addresses the economic problem of natural monopoly
in markets for infrastructure services.

12.10
The Regime has been reviewed three times, by the Productivity
Commission in 2001 and 2013, and then by the Harper Review in 2015.
Both the 2013 and 2015 reviews examined the application of the
declaration criteria and whether they were achieving the objectives
of the Regime. These two reviews involved extensive consultation
with the public and the States and Territories.

12.11
The Government decided in 2014 that it would respond to both
reviews following the conclusion of the Harper Review.

12.12
The Government decided to implement all of the recommendations of
the Productivity Commission as part of its response to the Harper
Review. These amendments seek to refocus and clarify the intent of
the Regime. In particular, they seek to clarify the declaration
criteria that the Council and Minister must be satisfied of in
order to recommend that a service be declared, or declare the
service, respectively. This then determines when arbitration by the
Commission will be available to access seekers or access
providers.

Summary of new law

12.13
Schedule 12 amends the Regime to ensure that it remains an
accessible and effective regulatory option, which can boost
competition in the economy and create predictable outcomes. The
primary changes included in this Schedule are:

-
amend and clarify the declaration criteria that must be used by the
Council and designated Minister;

-
amend the default position, whereby the Minister is now deemed to
have made a decision in accordance with the declaration
recommendation of the Council if the Minister has not responded
within 60 days; and

-
amend and clarify the scope of a determination made by the
Commission to ‘extend’ a facility in an access
dispute.

-
provide the Minister with power to revoke certification on
recommendation by the Council, if the regime ceases to be
effective.

Comparison of key features of new law and
current law

New
law

Current law

Declaration criteria

The declaration
criteria that must be considered by the Council and Minister are
contained in a single section.

The declaration
criteria that must be considered by the Council and Minister are
replicated across multiple sections.

T he
decision maker must consider whether access (or increased access)
on reasonable terms and conditions as a result of declaration would
promote a material increase in competition.

The decision maker
must consider whether total foreseeable market demand could be met
by the facility over the declaration period at least cost when
compared to two or more facilities.

The decision maker
must consider whether it is uneconomical for anyone to develop
another facility to provide the service.

No
change.

The decision maker
must consider whether the facility is of national significance,
having regard to its size, importance to constitutional trade or
commerce and to the national economy.

The decision maker
must consider whether access (or increased access) would promote
the public interest.

The decision maker
must consider whether access (or increased access) would not be
contrary to the public interest.

The decision maker
cannot declare a service if it is subject to an effective access
regime. (No longer a criterion - now a threshold
question).

The decision maker
must consider whether the service is subject to an effective access
regime as part of the declaration criteria.

Power of the
Minister and the Commission

The Minister may
revoke the certification on recommendation by the Council, if the
regime ceases to be effective. The Council may make a
recommendation on its own initiative or on
application.

No
equivalent.

The
Commission’s power to make a determination requiring a
facility operator to extend or expand the facility, and the
safeguards on that power, are clarified to include capacity and
geographical expansions.

The
Commission’s power to make a determination requiring a
facility operator to extend the facility, and the safeguards on
that power, has been interpreted to include the power to order
‘expansions’.

Default
declaration decision

The Minister is
taken to have accepted the Council’s recommendation if he or
she does not publish a decision on a declaration within the 60 day
time limit

The Minister is
taken to have not made a declaration if they have not published a
decision within the 60 day time limit.

Detailed explanation of new
law

12.14
The declaration criteria are matters about which the Council and
Minister must be satisfied prior to recommending a declaration be
made, or making a declaration, respectively. Additional
considerations of a commercial, economic or other character may be
relevant in determining whether criterion (d) is met.

Simplification of declaration
criteria

12.15
Schedule 12 simplifies the law by specifying in a separate section
the four declaration criteria that must be considered by both the
Council and the Minister. This makes it clearer that the Minister
and the Council must consider the same matters, and avoids
duplication within the legislation. [Schedule 12, items 1 to 2, sections 44B and
44CA]

12.16 To reflect the movement of
the declaration criteria into a separate section, sections 44G and
44H(4) provide, respectively, that the Council cannot recommend
that a service be declared unless it is satisfied of all the
declaration criteria for the service, and the designated Minister
cannot declare a service unless he or she is satisfied of all the
declaration criteria for the service. [Schedule 12, items 10and 11, sections 44G and
44H(4)]

12.17
Certain other elements of the Act are amended to reflect that the
declaration criteria the Minister and Council must consider are now
in a single provision. Councillors are now required to include in
the Annual Report prepared under section 29O details of any
judicial interpretation of the declaration criteria. [Schedule 12, items 43 and 45, subparagraphs
29O(b)(ii) and 29O(2)(b)(ii)]

(1) The competition test (criterion
(a))

12.18
Paragraph 44CA(1)(a) requires an assessment of the effect of access
(or increased access) on competition in at least one market, other
than the market for the service, as a result of a declaration.
[Schedule 12, item 2, paragraph
44CA(1)(a)]

12.19
The amendments require the Council and the Minister to consider
whether access (or increased access) on reasonable terms and
conditions as a result of declaration would promote a material
increase in competition in a market other than the market for the
service. That is, the amendments focus the test on the effect of
declaration, rather than merely assessing whether access (or
increased access) would promote competition.

12.20
This requires a comparison of two future scenarios: one in which
the service is declared and more access is available on reasonable
terms and conditions, and one in which no additional access is
granted. That is a comparison of either: no access without
declaration compared with some access as a result of declaration;
or some access without declaration to additional access as a result
of declaration. In comparing these two scenarios, it must be the
case that it is the declaration resulting in access (or increased
access) on reasonable terms and conditions that promotes the
material increase in competition.

12.21
What are reasonable terms and conditions is not defined in the
legislation. This is an objective test that may involve
consideration of market conditions. It does not require that the
Council or Minister come to a view on the outcomes of a Part IIIA
negotiation or arbitration. The requirement that access is on
reasonable terms and conditions is intended to minimise the
detriment to competition in dependent markets that may otherwise be
caused by the exploitation of monopoly power. Reasonable terms and
conditions include those necessary to protect the legitimate
interests of the owner of the facility.

(2) Total foreseeable market demand test
(criterion (b))

12.22
Paragraph 44CA(1)(b) asks whether the facility that provides (or
will provide) the service could meet the total foreseeable market
demand at least cost over the declaration period. This is in
comparison to a scenario where there are two or more facilities.
The amendment to this paragraph is intended to refocus the test to
a ‘natural monopoly’ test instead of a ‘private
profitability’ test. [Schedule 12, item 2, paragraph
44CA(1)(b)]

12.23
The approach under the new paragraph is market-based, requiring the
market in which the infrastructure service under application is
supplied to be defined. This includes any substitute services that
serve or will serve the market.

12.24
Total foreseeable market demand is considered over the declaration
period the decision-maker is considering for declaration of the
service. In assessing whether a facility could meet total
foreseeable market demand at least cost, this calls for a
consideration of whether what could be expected to be maximum
demand could be supported by the facility.

12.25
The requirement to assess whether a facility could meet total
foreseeable market demand ‘over the period for which the
service would be declared’ does not limit the Council and the
Minister to consideration of any period claimed in the application
for declaration. The Council and the Minister are to recommend and
decide, respectively, what is the appropriate period for
declaration of the service.

12.26
Because the test uses the concept of foreseeability, it is not
limited to looking at maximum demand based on current uses of the
service. Other future uses may be relevant to the consideration, if
they are foreseeable.

12.27
The time period for declaration will be relevant to considerations
of foreseeability. If the declaration period being contemplated is
only 10 years, it is not necessary to consider demand for the
service far beyond that period. While it may be possible to foresee
increased demand for the service in 30 years as a result of a
long-term development, it is unlikely this demand would affect the
natural monopoly status of the service within the declaration
period. The Council and the Minister may need to consider multiple
potential declaration periods in determining whether there is an
appropriate declaration period over which criterion (b) would be
met.

12.28
Whether total foreseeable market demand can be met at least cost
over the declaration period is a question of judgement informed by
facts. Consideration would be given to a comparison of the costs
from the facility in question meeting total foreseeable market
demand with the costs that would be incurred in the least costly
alternative scenario.

12.29
Broadly, the alternative scenarios to be considered will depend on
whether there is a substitute service provided by another facility.
Different alternative scenarios could be considered based on
whether there are existing substitutable services or not, for
example:

-
if there is a substitute service provided by another facility there
are, broadly, two potential alternative scenarios: the two
substitute facilities share total foreseeable market demand; or a
third facility is built to provide part of total foreseeable market
demand; or

-
if there is not a substitute service provided by another facility
there may only be one potential alternative scenario, that is the
duplication (or partial duplication) of the facility.

12.30
Paragraph 44CA(2)(a) contemplates that a facility, which is at
capacity, can be declared if it is reasonably possible for it to be
extended or expanded. However, it is not necessary for the Council
and the Minister to have regard to a facility at capacity as if it
had expanded capacity, if it is not reasonably possible for that
facility to be expanded or extended. [Schedule 12, item 2, paragraph
44CA(2)(a)]

Determining costs of meeting total foreseeable
market demand

12.31
The costs relevant to determining whether a facility can meet total
foreseeable market demand at least cost are not defined, but
specifically include the cost to the provider of the service of
co-ordinating multiple users of the facility. These
co-ordination costs could include the costs of lost production or
of being allocated less of the service’s capacity as a result
of the facility becoming a multi-user facility. [Schedule 12, item 2, paragraph
44CA(2)(b)]

12.32
The costs of application for declaration should not be considered,
because those are irrelevant to whether the facility is operating
as a natural monopoly. [Schedule 12, item 2, subsection
44CA(2)]

12.33
The administrative and compliance costs that may be incurred by the
service provider as a result of the declaration would be considered
in criterion (d), as they would not be incurred if access was
provided without the declaration. Further guidance on the
allocation of costs and benefits between criterion (b) and
criterion (d) is below. [Schedule 12, item 2, subsection
44CA(3)]

12.34
To reflect the changes that have been made to criterion (b),
subsections 44F(4) and 44H(2) have been repealed. This also makes
it clear that this test will be considered once, as part of the
declaration criteria. [Schedule 12, items 7 and 11, subsections 44F(4)
and 44H(2)]

(3) The national significance test (criterion
(c))

12.35
Paragraph 44CA(1)(c) requires the decision maker to be satisfied
that the facility is of national significance, having regard
to:

-
the size of the facility;

-
the importance of the facility to constitutional trade or commerce;
or

-
the importance of the facility to the national economy.
[Schedule 12, item 2, paragraph
44CA(1)(c)]

12.36
This test replicates, in the new subsection 44CA(1), the existing
national significance test.

(4) The public interest test (criterion
(d))

12.37
Subsection 44CA(1)(d) asks if access or increased access to the
service as a result of declaration of the service, on reasonable
terms and conditions, would promote the public interest. This means
that a decision maker must be satisfied that declaration is likely
to generate overall gains to the community. [Schedule 12, item 2, paragraph
44CA(1)(d)]

12.38
Subsections 44CA(3)(a) and (3)(b) set out non-exhaustive factors
that decision makers are required to consider to determine the
effect of the declaration on the public interest. These include the
effect of declaration on investment in infrastructure services and
dependent markets, as well as the administrative and compliance
costs incurred once a service is declared. [Schedule 12, item 2, paragraph
44CA(3)]

12.39
Subsection 44CA(1)(d) now constitutes an additional positive
requirement which must be met before a service can be declared.
However, it is only to be considered when subsections (a), (b) and
(c) have been met, and it does not necessarily follow from this
result that (d) will also be satisfied. [Schedule 12, item 2, paragraph
44CA(1)(d)]

12.40
Criterion (d) does not call into question the results of
subsections 44CA(1)(a), (b) and (c). It accepts the results derived
from the application of those subsections, but it enquires whether,
on balance, declaration of the service would promote the public
interest. It provides for the Minister to consider any other
matters that are relevant to the public interest. [Schedule 12, item 2, paragraph
44CA(1)(d)]

Considering costs and benefits
under criterion (b) and criterion (d)

12.41
The examples below provide an illustration of the allocation of
costs and benefits between criterion (b) and criterion (d), noting
that the circumstances of each case will vary and that it will not
always be appropriate or necessary to consider any or all of the
costs and benefits outlined.

Example 12.1

A mining company
has built a track of rail from its mine through to the local port.
The mining company is the only user of the rail track and does not
intend for other entities to use it. A new miner now wants to
access the railway line but has been unable to enter a reasonable
commercial agreement with the line’s owner.

The new miner
decides to make an application for declaration of the rail line.
The line is not subject to an existing declaration or an access
undertaking and is not covered by a certified effective access
regime.

In relation to
criterion (b), consideration would be given to the appropriate time
period for declaration, what the demand from the new mine will be
for the service and whether other new mines or other entities might
also add to this demand. In this example, a 10 year declaration
period is considered appropriate and, because of high commodity
prices, it is likely another two or three mines may be built in the
area which would also need access to rail transport
services.

Once this has been
established, consideration can be given to the costs of meeting the
demand using the existing rail line (including costs of extending
the line to the new mine or mines), compared with the costs of this
demand being met by two or more lines (the existing line
without expansion or extension and a new line).

If the demand were
met by the existing line, the costs that may be considered for the
assessment of criterion (b) could include:

â¢
the costs of changes and extensions to the facility to allow third
party access, such as physical modifications to the railway line to
increase its capacity to deal with higher demand and associated
increased maintenance costs;

â¢
coordination costs associated with having multiple users of the
same rail line, such as the costs of putting new systems or
technologies in place to administer all freight trains; and

â¢
opportunity costs associated with having multiple users of the
facility (and that would be incurred even if multiple users were
granted access through a commercial agreement rather than as a
result of declaration) such as:

-
costs to the mining company associated with a reduction in the
total capacity of the rail line due to it becoming a multi-user
facility,

-
costs arising from delays to undertaking expansions of capacity
because of the need to consult other users; and

-
costs arising from delays to implementing technological
improvements because of the need for other users to also adapt
their operations.

If the demand were
met by the existing line and a new line, then the costs that may be
considered for the assessment of criterion (b) could
include:

â¢
the costs of land acquisitions,

â¢
construction and maintenance costs for the new line;

â¢
the costs of supporting infrastructure for the new line.

When
considering whether declaration would promote the public interest,
the Council and the Minister may have regard to a very wide range
of matters. Examples of the costs and benefits that may be relevant
to the assessment of criterion (d) may include:

â¢
the administration and compliance costs that are associated with
complying with a declaration, such as the costs of arbitration by
the ACCC;

â¢
environmental and social costs and benefits, such as the costs to
the local community of disruption or displacement associated with
land acquisitions, or increased employment in the region as a
result of investment in the new mine or a new rail line;

â¢
the potential for incentives to undertake investment in other
significant infrastructure to decline because of a (real or
perceived) risk that such infrastructure will be declared; and

â¢
the loss of investment, or reduced incentive to invest, in markets
that are dependent on access to the rail line, such as other mines,
as a result of declaration.

The above is
neither a determinative nor an exhaustive list of what may be
included under the two criteria. Other costs may also be relevant,
however if they are considered under (b), then (d) should accept
the results derived from the application of that subsection, and
should not consider them again. This is also the case for any
corresponding benefits that are considered as part of the
tests.

If all of the
criteria in sections 44CA(1)(a) - (d) are met, it is
appropriate that the service be declared.

Example 12.2

An airport has a
number of existing carriers that access its services. A new carrier
now also wants to access the airport, but has been unable to reach
a reasonable commercial agreement with the owner.

The new carrier
decides to make an application for declaration of the airport. The
airport is not currently subject to declaration or an access
undertaking, and is not covered by a certified effective access
regime.

In relation to
criterion (b), it would be relevant to consider the appropriate
time period for declaration, and expected passenger traffic over
the period. In this example, a 10 year declaration period is
considered appropriate and, because of an increase in tourist
traffic in the area, demand for airport’s services is
expected to increase.

Once this has been
established, consideration can be given to the costs of meeting the
demand using the existing airport (including costs of expanding the
capacity of the airport), compared with the costs of this demand
being met by two or more airports (the existing airport without
expansion or extension and a new airport).

If the demand were
met by the existing airport, the costs that may be considered for
the assessment of criterion (b) could include:

â¢
the costs of expanding the airport to increase its capacity to deal
with higher demand, including increased maintenance costs and
transitional declines in capacity during construction;

â¢
increased production costs, such as wages, of meeting total demand
for the airport’s services;

â¢
opportunity costs associated with having more users of the
facility. Some opportunity costs will have already been incurred
given the facility already has multiple users per the existing
commercial agreement. These include:

-
costs arising from delays to undertaking expansions of capacity
because of the need to consult the additional users; and

-
costs arising from delays to implementing technological
improvements because of the need for the new users to also adapt
their operations.

If the demand were
met by the existing airport and a new airport, then the costs that
may be considered for the assessment of criterion (b) could
include:

â¢
the costs of land acquisitions;

â¢
construction and maintenance costs for the new airport;

â¢
the costs of supporting infrastructure for the new airport, such as
metro lines, roads and highways.

When considering
whether declaration would promote the public interest, examples of
the costs and benefits that may be relevant to the assessment of
criterion (d) may include:

â¢
the administration and compliance costs that are associated with
complying with a declaration such as the costs of arbitration by
the ACCC;

â¢
environmental and social costs and benefits such as the costs to
the local community of disruption or displacement associated with
land acquisitions, increased employment in the region as a result
of investment in a new airport, costs to the local community of
increased access by carriers such as increased pollution and noise
levels;

â¢
the potential for incentives to undertake investment in other
significant infrastructure to decline because of a (real or
perceived) risk that such infrastructure will be declared; and

â¢
the loss of investment, or reduced incentive to invest, in markets
that are dependent on the declaration occurring, such as the
commercial facilities of the airport or hotels and resorts
dependent on increased tourism traffic from new carriers.

The above is
neither a determinative nor an exhaustive list of what may be
included under the two criteria. Other costs may also be relevant,
however if they are considered under (b), then (d) should accept
the results derived from the application of that subsection, and
should not consider them again. This is also the case for any
corresponding benefits that are considered as part of the
tests.

If all of the
criteria in sections 44CA(1)(a) - (d) are met, it is
appropriate that the service be declared.

Dealing with submissions on an application for
declaration

12.42
Subsection 44FA(4) allows the Council to make information it
receives in response to a notice issued under section 44FA publicly
available, subject to any confidentiality concerns.
[Schedule 12,
item 9, subsection 44FA(4)]

Minister is taken to have made a decision in
accordance with the recommendation after 60
days

12.43
The Minister will be taken to have made a decision that is in
accordance with the declaration recommendation if they have not
published under section 44HA their decision within 60 days after
receiving a recommendation.

12.44
This means that if a decision on the declaration recommendation has
not been published within 60 days, then it will be made by default
after the period. The default decision will also be taken to be
published in accordance with section 44HA. [Schedule 12, item 12, subsection
44H(9)]

Applications may not be made for declaration of
a service where it is subject to certain
decisions

12.45
An application for declaration will now only be considered valid if
the service to be declared is not the subject of: a decision under
section 44N that the regime to which the service is subject is
an effective access regime; an access undertaking in operation
under Division 6; a decision by the Council under section 44PA(3);
a 15-year no-coverage determination or a price regulation exemption
in force under the National Gas Law (where the service is provided
by means of a pipeline); or a decision of the designated Minister
in force under section 44LG. [Schedule 12, items 5 and 6, subsections 44F(1)
and 44F(2)]

12.46
If the Council decides that any of these situations (set out in
section 44F(1)(a) - (e)) apply to a service in relation to
which a person has made an application for declaration, the Council
must provide written notice explaining why the situation applies
and that an application cannot therefore be made for declaration of
the service. [Schedule 12, item 5, subsection
44F(1A)]

12.47
These changes make the aforementioned situations threshold
criteria. This means that the Council is able to save on the
administrative costs of considering the application and expedite
the decision making process.

Designated Minister

12.48
Amendments have been made to section 44D to remove ambiguity
regarding who the designated Minister is where the provider is a
state or territory body. This will provide certainty in relation to
decisions to declare a service and as to whether a service is
ineligible to be declared. For example, there is currently
ambiguity where the service is owned by a state or territory body,
but operated by another non-state or territory body. The amendments
mean that the designated Minister will be the responsible state or
territory Minister where the provider is a state or territory body
that has some control over the conditions for accessing the
relevant facility. [Schedule 12, items 3 and 4,
paragraphs 44D(2)(a) and
44D(4)(a)]

Recommending to revoke a declaration -
considering if a service is subject to an effective access
regime

12.49
Subsection 44J(2) sets out that the Council cannot recommend
revocation of a declaration unless it is satisfied that: subsection
44F(1) would prevent the making of an application for
recommendation of declaration; or subsection 44H(4) would prevent
the service concerned from being declared. This change to
subsection 44J(2) means that the Council is able to consider if the
service in question is the subject of a certified access regime
when recommending the revocation of a declaration.
[Schedule 12,
Item 13, subsection 44J(2)]

Revoking the certification that an access regime
is ‘effective’

12.50
Part IIIA provides that a service cannot be declared by the
designated Minister if the service is already subject to a regime
that has been certified as an effective access regime. The
amendments insert new subdivision CA to Division 2A of Part IIIA
that deals with the revocation of access regimes that have
previously been certified as effective by the Commonwealth
Minister. [Schedule 12, item 20,
Subdivision CA]

12.51
Subsections 44NBA(1), (5) and (6) set out that if a ministerial
decision on whether an access regime is effective under section 44N
is in effect, then the Council may on its own initiative, or on
application, assess whether to recommend that the Commonwealth
Minister revoke or not revoke their decision. [Schedule 12, item 20, subsections 44NBA(1),
44NBA(5), 44NBA(6)]

12.52
Before considering on its own initiative whether to recommend that
the Commonwealth Minister should revoke the decision, the Council
must publish, by electronic or other means, a notice to that
effect, and give a copy of the notice to the responsible Minister
for the State or Territory and to the provider of the service. It
signals to the facility operator and to the responsible Minister
for the State or Territory that the Council is considering
revocation of the access regime. [Schedule 12, item 20, subsections 44NBA(2) and
44NBA(3)]

12.53
Subsection 44NBA(3) sets out that an application may be made by a
person seeking access to the service, the responsible Minister for
the State or Territory, or the provider of the service. It also
sets out that the Council must give a copy of the application to
the responsible Minister for the State or Territory and the
provider of the service, unless they are the applicant.
[Schedule 12, item 20, subsection
44NBA(3)]

12.54
The purpose for reconsideration is whether the access regime
continues to be an effective access regime. Accordingly, subsection
44NBA(5) sets out that the Council must consider whether the access
regime continues to meet the principles of what is an effective
access regime. An access regime may cease to meet the definition
because there has either been a substantial change to the regime,
or substantial changes to the principles on what constitutes an
effective regime. [Schedule 12, item 20, subsection
44NBA(5)]

12.55
Subsection 44NBA(4) sets out that, subject to subsection 44NBA(5),
the Council’s consideration of whether to make the
recommendation must be in accordance with section 44M(4). This is
to ensure the Council’s consideration of whether to make a
recommendation for revocation of certification is done in
accordance with the factors that would be relevant when it is
recommending that the Minister decide that an access regime is
effective. [Schedule 12, item 20,
subsections 44NBA(4) and 44NBA(5)]

12.56
The recommendations made by the Council to the Commonwealth
Minister under subsections 44NBA(6) and (7) must be in writing.
[Schedule 12, item 20, subsections 44NBA(6) and
44NBA(7)]

12.57
On receiving a recommendation, the Commonwealth Minister must
assess whether he or she should revoke the decision. The
Commonwealth Minister must make their decision in accordance with
the factors that would be relevant to whether they should make a
decision that an access regime is effective, as set out in section
44N(2). [Schedule 12, item 20, subsection
44NBC(1)]

12.58
The Commonwealth Minister must be satisfied with the
Council’s assessment of whether the access regime is
effective. This requires them to consider the same factors and
matters as the Council, rather than assess the process that led the
Council to the decision. [Schedule 12, item 20, subsection
44NBC(2)]

12.59
Once the Commonwealth Minister has decided if they are satisfied or
not so satisfied, then they must issue a notice in writing, either
revoking or not revoking the decision. A notice that sets out that
the Commonwealth Minister is so satisfied must specify the day on
which the decision is to cease to be in force. [Schedule 12, item 20, subsections 44NBC(3) and
44NBC(4)]

12.60
If the Commonwealth Minister does not publish their decision in
accordance with section 44NG, within 60 days of receiving the
recommendation of the Council, they are taken to have made the
decision in accordance with the recommendation, and to have
published that decision under 44NG. [Schedule 12, item 20, subsection
44NBC(5)]

12.61
If the Commonwealth Minister has made a decision under
section 44NBC, the person who applied to the Council for the
Commonwealth Minister to make that decision, or anyone else who
would have had standing to request that the Council recommend to
the Commonwealth Minister that the decision be revoked, may apply
to the Tribunal for review of the Commonwealth Minister’s
decision. [Schedule 12, item 35, subsection
44O(1A)]

12.62
For the purposes of the Council’s assessment of what
recommendation to make, the Council may give a person a written
notice requesting information that they consider to be relevant.
The information requested must be specified in the notice. The
notice may specify kinds of information that may be requested, and
not just specific, precise or itemised bits of information,
provided that the Council considers it may be relevant to deciding
what recommendation to make. The notice must also request the
information be provided within a specified period. [Schedule 12, item 20, subsections
44NBB(1)]

12.63
If the Council has given a notice to a person, they must give a
copy of this notice to the applicant, the provider of the service,
and the responsible Minister for the State or Territory. If the
applicant or the service provider is issued a notice, then the
Council does not have to also send them a copy in addition to the
notice. The Council must also cause a notice to be published by
electronic or other means. [Schedule 12, item 20, subsection
44NBB(2)]

12.64
In deciding what recommendation to make on the application, the
Council must have regard to any information that was given within
the specified time period, but at their discretion may disregard
information given after the expiration of that period. [Schedule 12, item 20, subsection
44NBB(3)]

Extensions of facilities

12.65
The Commission can make a determination in an access dispute that
requires an infrastructure service provider to extend the facility
or permit interconnection to the facility by a third party. This is
separate to the declaration process, as the Commission may only
arbitrate an access dispute after a service has been declared.
There are also a number of safeguards that restrict how the
Commission may use these powers.

12.66
Various references in sections 44V, 44W and 44X are amended. The
intent of these amendments is to clarify that the Commission can
require a service provider to expand the capacity of its facility
(as well as being able to require a geographical extension) when
making an access determination. The amendments also clarify that
the safeguards in sections 44W and 44X apply to directed capacity
expansions. It is intended that the Commission could require
a provider to expand a facility’s capacity, whether or not it
requires the provider to extend the facility’s geographical
reach. [Schedule 12, items 38 to 41,
subsection 44V(2), paragraphs 44W(1)(d), 44W(1)(e) and
44X(1)(e)]

Classification of decisions as legislative
instruments

12.67
Subsections 44F(8), 44LG(7) and 44LI(10) have been repealed. The
effect of this is to make instruments under subsections 44F(7),
44LG(1) and 44LI(3) subject to item 19 of the table in section 6(1)
of the Legislation (Exemptions
and Other Matters) Regulation 2015 , consistent with
other decisions by the Minister and the NCC under Part IIIA.
[Schedule 12, items 8, 16 and 18, subsections
44F(8), 44LG(7) and 44LI(10)]

Consequential amendments

12.68
Schedule 12 makes a number of consequential amendments to
provisions of the Act as a result of moving the ‘declaration
criteria’ to section 44CA. [Schedule 12, items 14, 15 and 17,
paragraphs 44LB(3)(b), 44LG(5)(b),
44LI(2)(a)]

12.69
Schedule 12 also makes a number of consequential amendments to
provisions of the Act as a result of the replacement of section
44F(1). [Schedule 12, items 6, 10 and
11, subsections 44F(2), 44G(1)-(1A), (6)-(7), 44H(3)-(3A),
(6B)-(6C)]

12.70
Schedule 12 also makes a number of consequential amendments to the
provisions of the Act as a result of the insertion of the new
Subdivision CA of Division 2A of Part IIIA. [Schedule 12, items 21 to 36, 42 and 44,
subsections, 44NC(1), 44NC(2), 44NC(3), 44NC(5), 44NE(1), 44NE(3),
44NF(1), 44NG(1), 44O(1), paragraphs 29O(a) and 29O(2)(a),
44NC(8)(a), 44NC(9)(a), 44NF(2)(a), 44NF(4)(a), 44NG (2)(a),
44NG(3)(a), 44ZZOAAA(3)(a), subparagraph,
44NE(6)(c)(iii)]

Commencement provisions

12.71
Schedule 12 commences on a day or days to be fixed by Proclamation.
If any of the provisions do not commence within 6 months from the
date of Royal Assent, they commence on the day after that 6 month
period.

Commencement, application and transitional
provisions

12.72 Schedule 12 commences
at the same time as Schedule 1.

Declared services (Part 1 of Schedule
12)

12.73
The amendments of sections 44F to 44H made by Part 1 of Schedule 12
apply in relation to applications made under subsection 44F(1) (as
amended by Part 1 of Schedule 12) on or after the commencement of
Schedule 12. [Schedule 12, item 19, sub item
19(1)]

12.74
If, on or after the commencement of Schedule 12, a Court or
Tribunal makes a decision interpreting any of the matters mentioned
in subsection 44H(4) (as in force before that commencement),
details of that decision must be included in the annual report
required to be produced by the Councillors under section 29O.
[Schedule 12, item 19, sub item
19(2)]

12.75
The amendment of section 44J made by Part 1 of Schedule 12 applies
in relation to declarations made before, on or after the
commencement of this item. [Schedule 12, item 19, sub item
19(3)]

Effective access regimes (Part 2 of Schedule
12)

12.76
The amendments to effective access regimes in Part 2 of Schedule 12
apply to all decisions under section 44N made on or after
1 January 2017. [Schedule 12, item
37]

Contingent numbering

12.77
Part 4 of Schedule 12 contains alternate numbering amendments where
commencement is contingent on whether Schedule 2 to the
Public Governance and Resources
Legislation Amendment Act (No. 1) 2017 commences before
this Bill. If Schedule 2 to the Public Governance and Resources Legislation
Amendment Act (No. 1) 2017 commences before this Bill,
items 42 and 43 apply. If that Schedule does not commence before
this Bill, items 44 and 45 apply. [Schedule 12, items 42-45, paragraphs 29O(a) and
29O(2)(a), subparagraphs 29O(b)(ii) and
29O(2)(b)(ii)]

â¢
Authorisations granted and in force under section 88 before
commencement;

â¢
Applications for authorisation under section 88 made, but not yet
determined, before commencement;

â¢
Notifications made under section 93 before commencement;

â¢
Applications for merger clearances made, and not determined, before
commencement; and

â¢
Applications for merger clearances granted, but not yet in force,
before commencement.

Comparison of key
features of new law and current law

New
law

Current law

A new
Division 3 is inserted into Part XIII of the Act, containing
transitional provisions related to amendments made by other
Schedules to this Bill.

Transitional provisions are not
required.

Detailed explanation of new
law

13.4
Schedule 13 inserts a new Division 3 into Part XIII of the Act,
which deals with the transitional application of amendments made by
a number of other Schedules to this Bill. [Schedule 13, item 1, Division 3 of Part
XIII]

New defined terms

13.6 Amended
Act is defined to mean the Act, as amended by the
amending Act.

13.7 Amending
Act is defined to mean the Competition and Consumer (Competition Policy
Review) Act 2017 . References to Schedules to the
amending Act are also references to the corresponding Schedule to
this Bill.

13.8 Commencement
time is defined to mean the commencement of Schedule
1 to the amending Act.

Amended definition of
‘competition’

13.9
The new section 181 provides that the definition of competition, as
amended by Schedule 1 to this Bill, applies in relation to conduct
engaged in at or after the commencement time.

Orders under section 87

13.10
A new section 182 provides that the amendments to section 87 made
by Schedule 5 of the amending Act do not apply in relation to, or
affect the validity of, certain orders under section 87 relating to
a contravention of section 45B. The specific orders in question are
those made before the commencement time and in force immediately
before the commencement time. [Schedule 13, item 1, section
182]

Authorisations under section
88

13.11
A new section 183 is inserted, which addresses authorisations under
section 88.

13.12
Authorisations granted under section 88 (other than subsections
88(5) or (6A)) before the commencement time, and in force
immediately before the commencement time, continue in force (and
may be dealt with) as if they had specified the relevant section of
the Act as amended by this Bill (as set out in the relevant
subparagraph of paragraph 183(1)(b)). [Schedule 13, item 1, subsection
183(1)]

13.13
Providing that such authorisations ‘may be dealt with’
as if they had been granted under the amended Act allows the
provisions of the new law to apply to procedures which may change,
or otherwise relate to, the authorisation (for example, an
application for minor variation, revocation or revocation and
substitution, or a Tribunal review).

13.14
If a valid application for authorisation is made under section 88
(other than the former subsections 88(5) or 88(6A), or for a merger
authorisation or merger clearance) before the commencement time,
and the Commission has not determined the application before
commencement time, then the application is taken to be an
application made under section 88 of the amended Act. Such
applications may be dealt with as if they had been made under
section 88 of the amended Act. [Schedule 13, item 1, subsection
183(2)]

13.15
This ensures that applications for authorisation which are pending
at the commencement time may be continued under the new law,
without the need for a fresh application.

13.16
If an authorisation is granted under section 88 (other than
subsections 88(5) or 88(6A)) before the commencement time, but has
not come into force by the commencement time, then the
authorisation is taken to be granted under section 88 of the
amended Act from the time it commences. Such applications may be
dealt with as if they had been made under section 88 of the amended
Act. [Schedule 13, item 1, subsection
183(3)]

Notices under section 93

13.17
A new section 184 is inserted to deal with notices under a
provision of section 93 that were in force immediately before the
commencement time. Such notices are to continue in force, and may
be dealt with, as if they had been given under section 93 as
amended by Schedule 8 to the amending Act. [Schedule 13, item 1, section
184]

Merger clearances and
authorisations

13.18
A new section 185 is inserted to deal with merger clearances and
authorisations, applied for, or granted under, Division 3 of Part
VII before the commencement time.

13.19
As detailed below, the new section 185 provides a number of general
transitional rules for merger clearances and authorisations:

â¢
existing old law merger clearances and authorisations (that is,
merger clearances and authorisations that are in force immediately
before the commencement time) are to be treated as new law merger
authorisations;

â¢
the old law continues to apply to applications for merger
clearances and authorisations pending at commencement (that is,
applications that have not yet been determined, or have been
granted but not yet enter into force);

â¢
the new law generally applies for review of merger clearance
determinations (unless the Tribunal has not yet made its decision
at the commencement time); and

â¢
old law merger clearances and authorisations granted or coming into
force after commencement are to be treated as new law merger
authorisations.

13.20
Where a merger clearance or authorisation was granted before the
commencement time and in force immediately before the commencement
time, it continues in force, and may be dealt with, as if it was
granted under section 88 as amended by Schedule 9 of the amending
Act, and as if it specified section 50. [Schedule 13, item 1, subsection
185(1)]

13.21 Where a merger clearance was
applied for, but not determined before the commencement time,
Subdivisions A and B of Division 3 of Part VII (except sections
95AH, 95AL, 95AR and 95AS) continue to apply as if they had not
been repealed by the amending Act. This does not apply
where:

â¢ a determination was made
under section 95AM, refusing to grant the clearance, before the
commencement time; or

â¢ the clearance came into
force before the commencement time. [Schedule 13, item 1, subsection
185(2)]

13.22 If a merger clearance is
granted in relation to an application falling under subsection
185(2), it is taken to be an authorisation under section 88 that
specifies section 50. [Schedule 13, item 1, note at subsection
185(2)]

13.23 Where a merger authorisation
was applied for under section 95AU, but not determined before the
commencement time, Subdivisions A and C of Division 3 of Part VII
(except sections 95AZ, 95AZA, 95AZL and 95AZM) continue to apply as
if they had not been repealed by the amending
Act. [Schedule 13, item 1, subsection
185(3)]

13.24 If a merger authorisation is
granted in relation to an application falling under subsection
185(3), it is taken to be an authorisation under section 88 that
specifies section 50. [Schedule 13, item 1, note at subsection
185(3)]

13.25
New subsection 185(4) deals with clearance
determinations , which are defined in the subsection
to mean a determination made by the Commission before, at or after
the commencement time under former section 95AM. [Schedule 13, item 1, subsection
185(4)]

13.26
After the commencement time, Part IX as amended by Schedule 9
to the amending Act applies in relation to a clearance
determination as if the clearance determination related to a
domestic merger authorisation rather than a clearance. The effect
of this provision is that the new law for Tribunal review of merger
authorisations also applies for Tribunal review of merger
clearances. [Schedule 13, item 1, subsection
185(4)]

13.27 However, where an
application for a review of a clearance determination is made
before the commencement time, but the Tribunal has not made its
decision before the commencement time, then subsection 185(4) does
not apply. For those applications, Division 3
of part IX continues to apply as if it had not been repealed by
Schedule 9 to the amending Act . This ensures such reviews
can proceed to determination by the Tribunal without the need for a
fresh application for review. [Schedule 13, item 1, subsection
185(5)]

13.28 Where a merger clearance or
authorisation was applied for before the commencement time, and
granted at or after the commencement time, it is to be treated as a
merger authorisation granted under the new law. That is, it is
taken to be an authorisation granted under section 88 of the
amended Act that specifies section 50. [Schedule 13, item 1, subsection
185(6)]

13.29
Where a merger clearance was granted under former section 95AD
before the commencement time, but not yet in force, before the
commencement time, it is taken to be, and may be dealt with, as an
authorisation granted under section 88 of the amended Act that
specifies section 50. [Schedule 13, item 1, subsection
185(7)]

13.30
New subsection 185(8) provides that the new section 92 applies to
information given to the Tribunal or Commission under Division 3 of
Part VII or Division 3 of Part IX (the old Divisions for merger
clearances, merger authorisations and Tribunal review of Commission
merger clearance decisions), as those Divisions continue to apply
under subsections 185(2), 185(3) or 185(5), as if that information
had been given under the new authorisation provisions in connection
with a merger authorisation. [Schedule 13, item 1, subsection
185(8)]

13.31
The effect of this provision is to ensure that the prohibition
against providing false or misleading information applies to
information provided under the old law for merger clearances and
authorisations (and Tribunal review of merger clearances), despite
the repeal of the relevant old provisions.

Commencement, application and transitional
provisions

Outline of chapter

14.1
Schedule 14 to this Bill makes various amendments to streamline the
administration of the Act, to reduce compliance burdens for
business, individuals and within Government, while preserving the
protections available under the Act.

Context of amendments

14.2
Following its meeting on 13 June 2014, the Legislative and
Governance Forum on Consumer Affairs issued a joint communique
announcing its intention to pursue measures to reduce compliance
burdens on business and consumers in the consumer law, whilst
preserving important protections under the Act.

14.3
The measures in this Schedule give effect to this decision, with a
focus on the requirements of the Australian Consumer Law (ACL),
which is set out in Schedule 2 to the Act.

Summary of new law

14.4
Schedule 14 to this Bill amends the Act and the ACL to:

â¢
remove the requirement for private litigants to seek Ministerial
consent to bring an action for a breach of the Act that takes place
overseas (Part 1);

â¢
extend the jurisdiction of State and Territory courts to hear
actions under the Act for pyramid selling and unsafe goods
liability (Part 2);

â¢
remove the redundant requirement for the ACCC to keep a register of
certain records when they hold conferences for product safety bans
(Part 3);

â¢
permit the disclosure of certain information by the ACCC to
specific agencies where it is reasonably necessary to protect
public safety (Part 4);

â¢
rectify a drafting error so that the offence of conspiracy is
removed from the Act, ensuring there is no overlap with the
Criminal Code Act
1995 (Part 5) ;

â¢
make clear the requirements in the ACL regarding the cooling off
period for unsolicited consumer agreements (Part 6);

â¢
rectify a drafting error which previously did not extend to any
person, as a law of the Commonwealth, the application of the ACL
regarding certain types of misleading conduct (Part 7); and

â¢
permit the ACCC to seek a court order directing a person to comply
with a notice given under section 155 of the Act to furnish
information, produce documents or give evidence (Part 8).

Comparison of key
features of new law and current law

New
law

Current law

Removes the
requirement for private litigants to seek Ministerial consent to
bring action for a breach of the Act that takes place
overseas.

The
Act requires Ministerial consent to bring action for a breach of
the Act that takes place overseas.

Extends the
jurisdiction of State and Territory courts to hear actions under
the Act for pyramid selling and unsafe goods
liability.

Removes the
requirement for the ACCC to keep a register of records of
proceedings at certain conferences or recommendations under the
product safety requirements.

Paragraphs 95(1)(h) and (j) require the ACCC to
maintain certain records, that relate to sections of the Act
that have been repealed and superseded by Div 3 of Part XI of
the Act.

Permits the
disclosure of certain confidential information by the ACCC to
specific agencies where it is reasonably necessary to protect
public safety.

Section 132A of the ACL permits the ACCC to
provide certain confidential information to any other person only
in limited circumstances.

Rectifies a
drafting error so that the offence of conspiracy is carved out of
the Act, ensuring there is no overlap with the Criminal Code Act
1995 .

Both
the Act and subsection 11.5 of the Criminal Code Act 1995 apply to a
relevant offence against the cartel offence provisions in the
Act.

Clarifies that the
cooling-off period for unsolicited consumer agreements begin
on the day the agreement is entered into.

The
current drafting of subsection 86(1) of the ACL may
inadvertently raise confusion about whether traders can supply
unsolicited goods or services and accept or require payment after
an unsolicited consumer agreement is entered into but before the
ten business days commence for the cooling-off
period.

Rectifies a
drafting error by extending to any person the application of the
ACL, as a law of the Commonwealth, regarding conduct that is liable
to mislead the public as to the nature, manufacturing process,
characteristics, suitability for purpose, or quantity of
goods.

Section 131 of the Act provides that section 33
of the ACL applies only to the conduct of corporations in trade or
commerce, as a law of the Commonwealth, regarding conduct
that is liable to mislead the public as to the nature,
manufacturing process, characteristics, suitability for purpose, or
quantity of goods.

Permit the ACCC to
seek a court order directing a person to comply with a notice given
under section 155 of the Act to furnish information, produce
documents or give evidence.

Section 155 of the Act does not permit the ACCC
to seek a court order to compel a person to comply with a notice
given under that section to furnish information, produce
documents or give evidence .

Detailed explanation of new
law

Part 1 — Removal of requirements for
Ministerial consents

14.5
Section 5 allows for the extraterritorial application of certain
provisions of the Act. Under section 5, Parts IV and XI, the
Australian Consumer Law (other than Part 5-3) and related
provisions of the Act extend to conduct engaged in outside of
Australia by certain entities (corporations incorporated in
Australia or carrying on business within Australia, Australian
citizens and persons ordinarily resident in Australia).

14.6
Currently, section 5 prevents private litigants from relying on the
extraterritorial application of the Act without the consent of the
responsible Minister.

14.7
This Part repeals subsections 5(3) and 5(4), and thereby removes
the requirement for private parties to seek Ministerial consent
before commencing an action for, or relying on, the
extraterritorial application of the Act under section 5 in certain
competition or consumer law actions relating to conduct occurring
overseas. [Schedule 14,
item 1, subsections 5(3) and (4)]

14.8
Subsection 5(5), which details when the responsible Minister is
required to give consent, is also repealed as it is made redundant
by the repeal of subsections 5(3) and 5(4). [Schedule 14, item 1, subsection
5(5)]

14.9
These amendments were recommended by the Harper Review, and remove
an unnecessary roadblock to possible redress for harm suffered as a
result of a contravention of the competition or consumer provisions
of the Act.

14.10
Section 5 continues to require that the contravening firm has a
connection with Australia in the nature of residence, incorporation
or business presence.

Application
provisions

14.11
The repeal of subsection 5(3) of the Act will apply to hearings
commencing on or after the day Schedule 14 commences. This means
that Ministerial consent will not be required for such hearings but
will still be required for hearings that have already
commenced. [Schedule 14, item
2]

14.12
The repeal of subsection 5(4) of the Act will apply to
applications made on or after the day Schedule 14 commences. This
means that Ministerial consent will not be required for such
applications. [Schedule 14, item
2]

Part 2 — Jurisdiction of State and
Territory courts

14.13
This Part amends Division 8 of Part XI of the Act to correct a
drafting error regarding the jurisdiction of state and territory
courts.

14.14
Specifically, it extends jurisdiction to State and Territory courts
to hear cases relating to pyramid selling (Division 3 of Part 3-1
of the ACL) and manufacturer’s liability for goods with
safety defects (Part 3-5 of the ACL).

14.15
States and Territories were consulted regarding this amendment.

14.16
Although this amendment extends jurisdiction, the current
subsection 138B(3) of the Act will still provide that the States
and Territories can, where they prefer to do so, limit their
courts’ jurisdiction to hear cases relating to pyramid
selling and manufacturer’s liability for goods with safety
defects.

14.17
This Part secures greater access to justice for consumers by
allowing them to seek redress in State and Territory courts and
tribunals for any breach of the ACL, rather than needing to seek
recourse in Federal courts. [Schedule 14, items 3 to 7, subsections 138B(2),
138C(1), 138C(3) and paragraphs 138D(1)(b) and
138E(1)(b)]

Application provision

14.18
The amendments made by this Part apply to matters arising on or
after the day Schedule 14 commences. [Schedule 14, item
8]

Part 3 — Register of
notifications

14.19
This Part amends subsection 95(1) of the Act to remove the
requirement for the ACCC to keep a register containing records of
proceedings at conferences held under section 65J or 65M of the
former Trade Practices Act
1974 (TP Act), and recommendations made to the Minister
responsible for the TP Act by the ACCC under sections 65K
or 65N of the former TP Act.

14.20
The requirements of sections 65J, 65K, 65M and 65N were superseded
by Division 3 of Part XI of the Act. Sections 132D and 132G of the
Act now achieve the objective of subsections 95(1)(h) and (j) in
ensuring transparency and accountability for product safety
decisions.

14.21
This amendment will not result in the removal of any information on
the Register of Notifications previously required to be kept by the
ACCC under subsection 95(1) of the Act. Such information will
continue to be kept consistent with the requirements of the
Archives Act 1983 .
Sections 132D and 132G of the Act also operate in a similar manner
to ensure that such information is published.

14.22
The information previously required to be held in accordance with
subsections 95(1)(h) and (j) will be kept consistent with the
requirements of Division 3 of Part XI of the Act in future.
[Schedule 14, items 9 to 10, paragraphs
95(1)(gb), 95(1)(h) and (j)]

Part 4 — Confidentiality of
notices

14.23
Under section 131 of the ACL, suppliers of consumer goods of a
particular kind have an obligation to report to the Commonwealth
Minister by written notice, within two working days of becoming
aware, that the goods have been associated with the death, serious
injury or illness of any person.

14.24
Section 132A of the ACL provides for the confidentiality of these
notices, unless the person who gave the notice has consented to the
ACCC sharing the information, or in other specific circumstances,
such as disclosure:

â¢
by the Commonwealth Minister to another Consumer Affairs Minister,
the regulator or an associate regulator (for example, the agency
that has responsibility for administering the ACL as a law of the
State or Territory);

â¢
by the Commonwealth Minister where they consider it is in the
public interest;

â¢
among the ACCC and associate regulators;

â¢
required or authorised by or under law; or

â¢
reasonably necessary for the enforcement of the criminal law or a
law imposing a pecuniary penalty.

14.25
This Part improves the ACCC’s ability to share notices it
receives under section 132A of the ACL with specified agencies
where it is reasonably necessary to protect public safety. To the
extent that a particular notice contains personal or confidential
information, the disclosure of such notices to other agencies or
bodies will still be required to comply with the law, including the
Privacy
Act 1988 .

14.26
Agencies specified in this Part and the reasons for their inclusion
are set out below:

Agency

Reason for their
inclusion

Any agency within
the meaning of the Freedom of
Information Act 1982

The ACCC works
closely with a range of Commonwealth agencies to ensure the safety
of products in Australia, for example, the Australian Customs and
Border Protection Service, Food Standards Australia New Zealand,
the Department of Infrastructure and Regional Development and the
Therapeutic Goods Administration. It is essential that the ACCC can
provide copies of notices it receives to relevant Commonwealth
agencies where it is reasonably necessary to protect public
safety.

Commonwealth
Director of Public Prosecutions

The Director of
Public Prosecutions is responsible for prosecuting breaches of the
criminal offences contained in the ACL, including the product
safety requirements of the ACL.

A State/Territory
government body (within the meaning of section 155AAA of the
Act)

The ACCC works
closely with a range of State and Territory bodies to ensure the
safety of products in Australia, for example, State and Territory
consumer agencies, food regulators and electricity regulators. It
is essential that the ACCC can provide copies of notices it
receives to relevant State and Territory bodies where it is
reasonably necessary to protect public safety.

A foreign
government body (within the meaning of section 155AAA of the
Act)

The ACCC works
closely with its counterpart regulators in other jurisdictions to
ensure the safety of products in Australia, given the global nature
of product markets. It is essential that the ACCC can provide
copies of notices it receives to its counterparts overseas where it
is reasonably necessary to protect public safety. As these notices
relate to product safety and are provided by industry, disclosure
to a foreign government agency is not expected to raise national
security concerns.

14.27
Before disclosing this information, the ACCC must be satisfied that
the disclosure is reasonably necessary to protect public safety.
[Schedule 14, item 11, section 132A of Schedule
2]

Application
provisions

14.28
The amendments made by this Part in relation to section 132A only
apply to disclosures relating to notices made on or after the day
Schedule 14 commences. [Schedule 14, item 27, section 291 of Schedule
2]

Part 5 — Cartel
offences

14.29
Section 79 of the Act provides for ancillary offences in relation
to criminal cartels and seeks to remove the duplicative application
of the equivalent requirements of the Criminal Code, which is set
out in a Schedule to the Criminal Code Act 1995 , where the
Act applies.

14.30
Due to a drafting error, section 79 does not remove the parallel
application of the offence of conspiracy found in subsection 11.5
of the Criminal Code. This Part corrects this error and removes
this overlap between the Act and the Criminal Code. [Schedule 14, item 12, subsection
79(5)]

Application provision

14.31
The amendments made by this Part apply in relation to
contraventions arising on or after the day Schedule 14 commences.
[Schedule 14, item
13]

Part 6 — Unsolicited consumer
agreements

14.32
This Part amends subsection 86(1), paragraphs 82(3)(a)-(d),
85(3)(a) and 85(6)(a), 86(1)(d)-(e) and section 179 of the ACL to
clarify the operation of the cooling-off period for
unsolicited consumer agreements.

14.33
Subsection 86(1) currently provides that a supplier under an
unsolicited consumer agreement must not supply unsolicited goods or
services, or accept or require payment under an unsolicited
consumer agreement, for ten business days commencing on the first
business day after such an agreement was made in person, or if it
was made by telephone, commencing at the start of the business day
after the consumer is given a copy of the agreement.

14.34
The current drafting of this provision may inadvertently permit
traders to supply unsolicited goods or services and accept or
require payment after an unsolicited consumer agreement has been
entered into, but before the ten business days commence (that is,
on the day the contract is agreed).

14.35
This amendment clarifies the responsibilities for traders and the
rights of consumers regarding the supply and acceptance of payment
for unsolicited goods or services and the commencement of the
cooling-off period. In particular, it now makes it clear that
the cooling-off period commences when the agreement is entered into
and that during this period traders are not permitted to supply
unsolicited goods or services and accept or require payment under
an unsolicited consumer. [Schedule 14, items 18 and 19, subsection 86(1)
of Schedule 2]

14.36
Consequential amendments are being made to paragraphs
82(3)(a)-(d), 85(3)(a) and 85(6)(a), and section 179 of the
ACL to ensure consistency with section 86 in the expression of, and
basis for, calculating the cooling-off period in those
requirements. [Schedule 14, items 14 to 17 and
20 to 22, subsections 82(3)(a) to (d), 85(3)(a) and 85(6)(a) and
section 179 of Schedule
2]

Application provision

14.37
The amendments made by this Part apply in relation to unsolicited
consumer agreements made on or after the day Schedule 14 commences.
[Schedule 14, item 27, section 292 of Schedule
2]

Part 7 — Misleading conduct as to the
nature etc. of goods

14.38
This Part corrects a drafting error by amending
subsection 131(2) of the Act to extend the application of
section 33 of the ACL, as a law of the Commonwealth, to the conduct
of any person.

14.39
The equivalent section under the former TP Act (section 55) had
applied to the conduct of any person and section 33 of the Act, as
a law of a state or territory, currently applies to the conduct of
any person.

Application provision

14.41
The amendment made by this Part applies to conduct occurring on or
after the day Schedule 14 commences. [Schedule 14, item
24]

Part 8 — Power to obtain information,
documents and evidence

14.42
Section 155 of the Act sets out the ACCC’s powers to
obtain information, documents and evidence. Currently, failure
to comply with a notice to furnish information, produce documents
or give evidence may result in a fine or a term of imprisonment.
The operation of section 155 is further detailed at Chapter 11.

14.43
This Part improves the efficacy of section 155 by permitting the
ACCC to seek a court order directing a person to comply with a
notice given under section 155. [Schedule 14, item 25, subsection
155(8)]

Application provision

14.44
The amendment made by this Part to section 155 applies in relation
to a refusal or failure to comply with a notice given on or after
the day Schedule 14 commences. [Schedule 14, item
26]

Application and transitional
provisions

14.45
The application of the amendments made by Schedule 14 is detailed
above in relation to each Part.

Policy objective

15.1
Prior to the 2013 Federal Election, the Government committed to a
‘root and branch’ review of competition laws and
policy. The review would examine the broader competition framework
to identify opportunities to increase productivity and efficiency
in markets, drive benefits to ease cost of living pressures and
raise living standards for all Australians.

15.2
The then Prime Minister and the then Minister for Small Business
announced a review of competition policy on 4 December 2013. On 27
March 2014, the then Minister for Small Business released the final
Terms of Reference following consultation with the States and
Territories, and announced the independent Review Panel, chaired by
Professor Ian Harper.

15.3
The Review was conducted over the course of 12 months, and
concluded with the release of the Final Report on 31 March 2015.
The Harper Review made 56 recommendations related to competition
laws, competition policies and competition institutions.

15.4
The Government released its response on 24 November 2015.

15.5
The package of amendments contained in this Bill implement a
significant number of the reforms to competition laws which the
Government supported in its response to the Harper Review. A number
of the other recommendations have already been addressed through
Government decisions, or are directed at State and Territory
governments.

15.6
In relation to the National Access Regime, the Government announced
its support for the recommendations made by the Productivity
Commission (PC) in its 2013 Inquiry Report into the National Access
Regime.

15.7
As detailed in earlier chapters, the recommendations which are
either partially or wholly contained in this Bill are:

â¢
The definition of ‘competition’ should be amended to
ensure it includes competition from potential imports
(recommendation 25);

â¢
The cartel conduct provisions should apply to conduct taking place
within Australia or across Australian borders, and the joint
venture exceptions should be broadened
(recommendation 27);

â¢
The separate prohibition on exclusionary provisions should be
repealed (recommendation 28);

â¢
The price signalling provisions should be repealed and replaced by
a more general prohibition on concerted practices with the purpose,
effect or likely effect of substantially lessening competition
(recommendation 29);

â¢
Third-line forcing should be prohibited only if it has the purpose,
effect or likely effect of substantially lessening competition
(recommendation 32);

â¢
Notification and a ‘related bodies corporate’ defence
should be available for resale price maintenance
(recommendation 34);

â¢
The maximum fines for secondary boycotts should be increased in
line with fines for other breaches of the Act (recommendation
36);

â¢
The authorisation and notification provisions should be simplified
to allow a single application for each transaction or arrangement,
and authorisation should be available for conduct which does not
substantially lessen competition, in addition to conduct that has a
net public benefit (recommendation 38);

â¢
The Commission should have a class exemption power to exempt kinds
of conduct that are not of competition concern (recommendation
39);

â¢
Section 83 should be extended to allow reliance on admissions of
fact (recommendation 41);

â¢
The National Access Regime declaration criteria should be revised
(recommendation 42) (note that the declaration criteria are being
revised in accordance with the recommendations made by the PC in
its Inquiry Report); and

â¢
The Act should be reformed to introduce greater flexibility for
collective bargaining by small business
(recommendation 54).

15.8
On 21 July 2015, Treasury certified that the Productivity
Commission Inquiry Report on the National Access Regime constituted
a process and analysis equivalent to a RIS. On 15 November 2015,
Treasury certified that the independent Harper Review constituted a
process and analysis equivalent to a Regulation Impact Statement
(RIS).

15.9
The Australian Government Guide
to Regulation identifies seven questions that a RIS
should address. Following is a summary of the analysis of those
questions that occurred as part of the independent reviews and
stakeholder consultation process in relation to the recommendations
implemented in this Bill.

Problem

15.10
The Harper Review Draft Report and Final Report and the PC Inquiry
Report into the National Access Regime discuss, in detail, the
problems with each of the provisions that this Bill substantially
amends, as well as with the Competition and Consumer Act 2010
(the Act) more generally.

15.11
The Harper Review was the first comprehensive review of
Australia’s competition framework in more than 20 years. The
Review Panel examined whether Australia’s existing
competition settings were fit for purpose, especially in light of
the persistent forces for change that will shape the Australian
economy now and into the future. The Harper Review identified
several such forces for change.

15.12
Firstly, the rise of Asia and other emerging economies provides
significant opportunities for Australia but also poses some
challenges. A heightened capacity for agility and innovation will
be needed to match changing tastes and preferences in emerging
economies.

15.13
Secondly, Australia’s ageing population will give rise to a
wider array of needs and preferences among older Australians and
their families. The right policy settings will help people to meet
their individual health and aged care needs.

15.14
Thirdly, new technologies are ‘digitally disrupting’
the way many markets operate, the way business is done and the way
consumers engage with markets. The challenge for governments is to
capture the benefits of digital disruption by ensuring that
Australia’s competition settings encourage innovation, but
still preserve expected safeguards for consumers.

15.15
Competition laws which are ‘fit for purpose’ will be
well suited to support Australia’s economy throughout these
changes. The Harper Review found, while the concepts, prohibitions
and structures of Australia’s competition were sound,
implementing a range of specific reforms would address problem
areas and enhance the effectiveness of the competition law.

15.16
In its Inquiry Report into the National Access Regime, the PC
similarly recommended reforms to the Regime to enhance its
effectiveness. The PC found that the scope of the Regime should be
confined to ensure its use is limited to the exceptional cases
where the benefits arising from increased competition in dependent
markets are likely to outweigh the costs of regulated third party
access to infrastructure services. The PC recommended amendments to
clarify the declaration criteria to achieve this outcome

Need for government
action

15.17
The Harper Review Draft Report and Final Report and the PC Inquiry
Report into the National Access Regime explain why government
action is needed to progress and implement those recommendations
which are contained in this Bill.

15.18
As discussed above, Australia’s competition framework needs
to be suited to a number of challenges facing Australia’s
economy.

15.19
The consultation and research undertaken by the Panel and by the PC
provide clear evidence that reform to Australia’s competition
laws is overdue and critical to improving Australia’s
productivity performance and sustaining standards of living over
the long term.

15.20
The Harper Review found that overall the central concepts,
prohibitions and structure of the current competition law should be
retained, as they are appropriate to serve the current and future
needs of the Australian economy.

15.21
However, the Harper Review also found that Australia’s
competition laws could be reformed to enhance their effectiveness
and ensure they continue to be fit for purpose. Many of the
competition law recommendations of the Harper Review are intended
to address the following types of problems:

â¢
some provisions of the Act are unnecessarily complex, leading to
regulatory uncertainty, unnecessary compliance burdens on business
and undue costs on the economy;

â¢
some provisions of the Act are overly prescriptive, or are
duplicative and redundant, and could be greatly simplified;

â¢
some provisions of the Act are unfit for purpose, and either
unnecessarily inhibit pro-competitive conduct or fail to
adequately prohibit anti-competitive conduct.

Policy options

15.22
The Harper Review Final Report considers and discusses a range of
policy options to enhance competition policy settings in Australia.
The benefits of reform are considered, with a preference for
reforms that enhance the long-term interests of
Australians.

15.23
The Issues Paper, published early in the Review process, provided
an initial forum for stakeholders to raise policy options. The
Draft Report weighed stakeholder views, considered the benefits of
potential reforms, made a range of draft recommendations and
invited further submissions in response to those recommendations.
The Final Report again weighed stakeholder views, considered the
benefits of potential reforms and made final recommendations which
were considered to be the best options for reform.

15.24
The Harper Review examined the Act to assess whether
Australia’s competition laws remained fit for purpose having
regard to consumer and business experience with the laws, changes
that have occurred in the Australian economy and that are
anticipated, and relevant international developments.

15.25
The policy options considered by the Review Panel, before arriving
at each of the final recommendations, are extensively detailed in
the Harper Review Final Report.

15.26
The following paragraphs detail the options that were considered in
determining how best to implement the policy intent in relation to
three key areas of reform:

â¢
joint venture exceptions for cartel conduct;

â¢
concerted practices; and

â¢
Tribunal review in relation to merger authorisations.

15.27
In relation to the National Access Regime, the PC considered
options including:

â¢
retaining the status quo - keeping the Regime in its present
form;

â¢
reforming the Regime - keeping the Regime, but making changes
to the framework in order to lower the costs of the Regime, and/or
increase the benefits; and

â¢
removing the Regime and relying on alternatives such as general
competition law, new regulatory structures, price surveillance or
monitoring, or ad hoc measures.

Analysis of
costs/benefits

â¢
Does the law focus on enhancing consumer wellbeing over the long
term?

â¢
Does the law protect competition rather than individual
competitors?

â¢
Does the law strike the right balance between prohibiting
anti-competitive conduct and not interfering with efficiency,
innovation and entrepreneurship?

â¢
Is the law as clear, simple and predictable as it can be?

15.29
The Review Panel found that some areas of Australia’s
competition law do not appropriately address each of these
considerations.

15.30
Before proceeding to make specific recommendations for reform, the
Review Panel and the PC analysed the costs and benefits of the
relevant policy options by benchmarking the status quo against each
proposal for reform.

15.31
Where the Panel considered that the competition laws have served
Australia well, the Final Report recommended specific reforms to
enhance their effectiveness. The Panel and the PC recommended a
number of changes to simplify and clarify the operation of the law,
to bring to the forefront the competition policy objectives of the
law, and to reduce business compliance costs.

15.32
Importantly, the Review Panel recognised that all changes to the
law will involve some transitional costs as firms become familiar
with the new provisions and as courts develop jurisprudence on
their application.

15.33
Many of the recommendations were specifically designed to help
businesses manage transitional costs, including:

â¢
legislative guidance to help guide the courts with respect to the
intended operation of provisions;

â¢
broadening the Commission’s powers to authorise conduct where
there is a net public benefit or where there are unlikely to be
competition concerns; and

â¢
encouraging the Commission to publish guidance material which sets
out its enforcement approach.

15.34
The Government further evaluated each of the chosen policy options
in light of stakeholder feedback received during exposure draft
consultation.

15.35
As detailed under ‘consultation’ below, the Government
has refined the draft law and explanatory material to further
reduce uncertainty and minimise the cost to business while
retaining the benefits of reform.

Joint venture exceptions for cartel
conduct

15.36
The Harper Review recommended that a broad exemption should be
included for joint ventures, whether for the production, supply,
acquisition or marketing of goods or services.

15.37
The Harper Review made this recommendation on the basis that the
current exceptions are too narrowly framed. Among other
limitations, the exceptions only apply where the relevant cartel
provision is contained in a contract and where the joint venture is
for the production and/or supply of goods or services. Submissions
to the Harper Review raised concerns that the narrow application of
the current exceptions was limiting legitimate commercial
transactions.

15.38
At the exposure draft stage, amendments were drafted to broaden the
joint venture exceptions so they do not limit legitimate commercial
transactions. In particular, the draft amendments extended the
joint venture exceptions to arrangements and understandings
containing cartel provisions, and to joint ventures for the
acquisition of goods or services. A decision was made not to extend
the exceptions to joint ventures for the marketing of goods or
services, as a joint venture established only for marketing would
effectively constitute a price-fixing cartel, and this would
weaken the prohibition on price-fixing cartels.

15.39
While the exposure draft amendments significantly broadened the
joint venture exceptions for the benefit of legitimate joint
ventures, concerns were raised that this may come at the cost of
significantly undermining the integrity of the cartel conduct
prohibitions; specifically, that the broadened exceptions would be
open to abuse by parties engaged in anti-competitive cartel
conduct and not genuinely in a joint venture.

15.40
Due to these concerns, a decision was made to proceed with
broadening the exceptions, but to also make appropriate amendments
to strengthen the exceptions to guard against abuse of the
exceptions. Specifically, the exceptions were limited to joint
ventures that are not for the purpose of substantially lessening
competition, and the burden of proof on a defendant to raise the
exceptions was raised to a legal burden. These amendments will
ensure the joint venture exceptions can only be raised by parties
who are engaged in a genuine joint venture.

Concerted practices

15.41
The Harper Review recommended that section 45 should be extended to
prohibit a person engaging in a concerted practice with one or more
other persons that has the purpose, effect or likely effect of
substantially lessening competition.

15.42
The Review Panel considered that no legislative definition of a
‘concerted practice’ was required, as “the word
‘concerted’ has a clear and practical meaning”,
and the exposure draft legislation was drafted on this basis. At
that stage, the explanatory material on concerted practices was not
extensive and referred to European law.

15.43
However, submissions to the exposure draft called for more guidance
as to what constitutes a concerted practice, as the concept is new
to Australian law. Several options to address this concern were
considered.

15.44
A legislative definition was considered, but ultimately not
adopted. Although a legislative definition would possibly increase
‘certainty’ as to what does and does not constitute a
concerted practice, this would require a focus on determining
whether conduct fits within detailed technical provisions, rather
than making a principled assessment of the conduct in its entirety.
It was considered that this approach would carry the risk of
inadvertently excluding conduct which should constitute a
‘concerted practice’ under section 45. Further, while
consultation generally showed a consensus as to the features of a
concerted practice, reducing these features to a legislative
definition proved problematic.

15.45
Ultimately, a decision was made to expand the explanatory material
in Chapter 3, to provide additional guidance as to the typical
features of a concerted practice while also leaving scope within
the Act to apply the concept to new forms of anti-competitive
conduct as they arise. This option was judged to most increase
certainty while also avoiding inappropriately limiting the scope of
the new concept.

Tribunal review in relation to merger
authorisations

15.46
The Harper Review recommended that the review by the Tribunal
should be based upon the material that was before the Commission,
but the Tribunal should have the discretion to allow a party to
adduce further evidence, or to call and question a witness, if the
Tribunal is satisfied that there is sufficient reason.

15.47
The exposure draft legislation provided for the Tribunal’s
review in relation to a merger authorisation to be a limited merits
review, that is, reviews would be based only on the material before
the Commission at the time of the Commission’s
determination. This approach was adopted as it would ensure
that parties had the incentive to place all relevant evidence and
information before the Commission at first instance, and that
Tribunal reviews in relation to merger authorisations could be
concluded expeditiously so as not to unduly prejudice merger
transactions.

15.48
However, concerns were raised that a limited merits review is
inappropriate, particularly as this would mean the Tribunal is
unable to take account of a change in circumstances following the
Commission’s decision, and parties would be unable to produce
evidence or information that they were not able to produce at the
time of the Commission’s decision. Several options to address
this concern were considered.

15.49
A full merits review (that is, a rehearing) by the Tribunal was
considered to be inappropriate in relation to merger
authorisations, given the time and commercial sensitivities of such
transactions. The prospect of a lengthy merits review could be open
to abuse by parties seeking to endanger the success of a merger
transaction.

15.50
Ultimately, a ‘hybrid’ merits review, similar to that
proposed by the Harper Review, was adopted. The Tribunal’s
review in relation to a merger authorisation will be based on the
material before the Commission, but the Tribunal may seek
clarifying information, and the Tribunal may allow the parties to
present new information or evidence which was not in existence at
the time of the Commission’s decision. This would
appropriately balance procedural fairness by allowing for a change
of circumstances to be taken into account, but would prevent
parties abusing the authorisation process by choosing to withhold
information from the Commission at first instance.

Consultation

15.51
The amendments contained in this Bill have been the subject of
extensive consultation. The 12-month review process provided all
interested stakeholders with opportunities to comment on proposed
changes to competition policies, laws and institutions. The Harper
Review process commenced with the release of an Issues Paper on 14
April 2014, followed by an eight week consultation period. During
this consultation period, the Review Panel received written
submissions and held meetings with local businesses in a number of
locations as arranged through representative business groups.

15.52
A Draft Report was released on 22 September 2014, followed by a
further eight week consultation period during which the Review
Panel received written submissions and held public forums in Perth,
Adelaide, Sydney, Brisbane, Canberra, Darwin and Hobart. On 23-24
October 2014, the Review Panel hosted an International Conference,
to draw on international and domestic expertise to consider the
review and recommendations in the Draft Report.

15.53
Over the course of the Harper Review, the Panel hosted more than
150 meetings with stakeholders and received almost 1,000 written
submissions (almost 350 in response to the Issues Paper and around
600 in response to the Draft Report).

15.54
In relation to the National Access Regime, the PC released an
issues paper in November 2012 for public comment. The PC held
roundtables concerning the issues paper in Melbourne and Sydney.
The PC released a draft report for public comment on 28 May 2013,
and held public hearings in Perth, Sydney and Melbourne. The PC
received 76 submissions through the consultation process.

15.55
The amendments contained in this Bill were released for exposure
draft consultation as the Competition and Consumer Amendment
(Competition Policy Review) Bill 2016. Submissions were accepted
over an eight week period from 5 September 2016 to
28 October 2016. During this public consultation period,
61 submissions were received, of which 5 were confidential. A
number of stakeholder meetings were also held during this
period.

15.56
Stakeholders raised a number of concerns with the proposed
amendments, as contained in the exposure draft legislation. The
main points of concern were:

â¢
that the meaning of ‘likely’, in the absence of the
definition in section 44ZZRB, was uncertain;

â¢
that the joint venture and vertical trading restriction exceptions
to the cartel prohibitions had become too broad, and would be open
to abuse by firms not genuinely in a joint venture or a vertical
relationship;

â¢
that the meaning of ‘concerted practices’ was not
sufficiently clear;

â¢
that the Tribunal review of the Commission’s decision in
relation to a merger authorisation was a limited merits
review;

â¢
the transitional treatment of certain merger authorisations and
clearances, following the amendments in Schedule 9, was not
sufficiently clear; and

â¢
that to allow an admission of fact to be proven by any document would allow for
documents not previously tested before a court to be relied on as
prima facie evidence.

â¢
that the updated declaration criteria in section 44CA(1), and the
costs to be taken into account under the different criteria, were
not sufficiently clear.

15.57
In response to these concerns, the Government made a number of
substantive amendments to the draft Bill and the Explanatory
Memorandum:

â¢
the amendment repealing section 44ZZRB was removed, to be given
further consideration;

â¢
the joint venture cartel exceptions were expressly limited to joint
ventures that are not for the purpose of substantially lessening
competition, and the burden of proof on the defendant was
increased;

â¢
the vertical trading restriction cartel exception was removed from
this Bill, to be given further consideration and progressed in a
future legislative package together with amendments to section
47;

â¢
additional guidance as to what may constitute a ‘concerted
practice’ has been inserted into Chapter 3 of this
Explanatory Memorandum;

â¢
the Tribunal was given a discretion to allow parties to a review of
the Commission’s decision in relation to a merger
authorisation to admit new evidence if that evidence was not in
existence at the time of the Commission’s decision;

â¢
a new Schedule 13 was added to the Bill, containing additional,
detailed transitional provisions for the treatment of merger
authorisations and clearances which were applied for, or granted,
under the old law; and

â¢
proof of an admission of fact was limited to either a document
under the seal of the court from which the admission of fact
appears, or a document filed with the court.

â¢
the declaration criteria were amended to provide greater clarity
and additional guidance as to the costs to be considered under
different criteria has been inserted in Chapter 12 of this
Explanatory Memorandum.

Agreed option

15.58
On 24 November 2015, in its response to the Harper Review, the
Government announced that it supported and would adopt each of the
recommendations being progressed through this Bill. This included
the recommendations of the PC Inquiry Report into the National
Access Regime, which the Government adopted in preference to the
Harper recommendations where they differed.

15.59
A regulatory costing for each of these amendments has been
prepared, consistent with the Government’s Regulatory Burden
Measurement Framework.

15.60
The amendments relating to price signalling and concerted
practices, resale price maintenance, and collective bargaining and
collective boycotts have each been estimated to result in a slight
increase in compliance costs.

15.61
In relation to price signalling and concerted practices, the
increased compliance costs are expected to be borne only initially,
and primarily by large businesses operating in concentrated markets
(i.e. those firms whose conduct is likely to have a substantial
impact on competition). At least some of those businesses are
likely to seek legal advice to ensure that their practices continue
to be compliant with section 45 as amended. After this initial
expenditure, any ongoing additional compliance costs will be
minimal.

15.62
In relation to resale price maintenance, compliance costs will be
reduced by the availability of notification, which is a quicker and
less costly exemption process than seeking an authorisation.
However, as noted in Chapter 8, the delay and expense of seeking
authorisation for resale price maintenance means that the
authorisation process is currently not utilised by businesses. To
the extent that some businesses will make use of the newly
available notification procedure for resale price maintenance, when
they would not have sought an exemption for the same conduct
through authorisation, those businesses will incur additional
compliance costs.

15.63
In relation to collective bargaining and collective boycotts, the
notification process is made more flexible and accessible by the
amendments, and this carries substantial benefits for small
businesses. To the extent that this greater flexibility and
accessibility encourages notifications from small businesses, who
previously would not have sought any form of exemption, additional
compliance costs will be incurred by those small businesses.
However, those compliance costs will be minimal and the benefits of
a more efficient exemption process will ultimately prove to be of
significant value to small businesses wishing to collectively
bargain.

15.64
The regulatory costs of each recommendation implemented in this
Bill are summarised in Table 15.1.

Table 15.1 : Regulatory burden
estimate (RBE) table

Average annual
regulatory costs (from business as usual)

Harper
rec.

Amendment

Schedules

Business

Community
organisations

Individuals

Total change in
costs

25

Definition of
competition

1

-

-

-

-

27

Cartel conduct
prohibition

2

-

-

-

-

28

Exclusionary
provisions

4, also 2 and
3

-

-

-

-

29

Price signalling
and concerted practices

3

0.64

-

-

0.64

32

Third-line forcing
test

7

-3.6

-

-

-3.6

34

Resale price
maintenance

8, also
9

0.16

-

-

0.16

35

Mergers

9

-

-

-

-

36

Secondary
boycotts

6

-

-

-

-

38

Authorisation and
notification

9

-

-

-

-

39

Class exemption
power

9

-0.45

-

-

-0.45

40

Power to obtain
information, documents and evidence

11

-1.3

-

-

-1.3

41

Admissions of
fact

10

-

-

-

-

42

Access to
services

12

-

-

-

-

54

Collective
bargaining and collective boycotts

9

0.01

-

-

0.01

Total :
$-4.54m per year

Implementation and
evaluation

15.65
Implementation of the amendments contained in this Bill will be
undertaken jointly by the Government and the Commission.

15.66
Concurrently with the release of the exposure draft legislation,
the Commission consulted on a draft Framework for concerted practices
guidelines . The feedback from this consultation will
inform the development of the Commission’s final guidelines,
which will detail its approach to the interpretation and
enforcement of section 45 as amended.

15.67
The Commission will be responsible for approving forms for use in
applications for authorisations, notification of exclusive dealing
or resale price maintenance and notification of collective
bargaining (under sections 89, 93 and 93AB respectively).

15.68
Prior to exercising its new power to make, vary or revoke a class
exemption, it is expected that the Commission will undertake
consultation with the affected industry and other relevant parties
to determine the most appropriate scope of the class exemption.

Prepared in accordance with Part 3 of the
Human Rights (Parliamentary
Scrutiny) Act 2011

16.1
This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in
section 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 .

Schedule 1 - Definition of
competition

Overview

16.2
Schedule 1 to this Bill amends the definition of
‘competition’ in section 4 of the Act, to clarify that
competition includes competition from goods and services that are
capable of importation and not just goods and services actually
imported.

16.3
This reflects the fact that even if goods and services are not
ultimately imported, the credible threat of importation can exert
competitive pressure on, and affect competition in, Australian
markets.

Human rights
implications

16.4
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.5
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 2 - Cartels

Overview

16.6
Schedule 2 to this Bill makes a number of amendments to simplify
the provisions on cartel conduct and better target
anti-competitive conduct.

16.7
The application of the provisions is confined to cartel conduct
affecting competition in Australian markets, to align with the
Act’s objective of enhancing the welfare of Australians. This
is achieved by adding the words ‘in trade or commerce’
to various provisions. Trade or
commerce is defined in section 4 to mean trade or
commerce within Australia or between Australia and places outside
Australia.

16.8
The scope of the joint venture exceptions in sections 44ZZRO and
44ZZRP is modified to more appropriately exempt legitimate joint
ventures.

16.9
The amended exceptions are:

â¢
broadened to apply to arrangements or understandings (in addition
to contracts);

â¢
broadened to apply to joint ventures for the acquisition of goods
or services (in addition to the production or supply of goods or
services); and

â¢
limited to cartel provisions that are for the purposes of, and
reasonably necessary for undertaking, the joint venture.

16.10
The joint venture exceptions are also tightened so they do not
apply to joint ventures that are carried on for the purpose of
substantially lessening competition. This ensures that the
exceptions are confined to joint ventures established for genuine
commercial purposes.

16.11
The joint venture exceptions are also amended to increase the
standard of proof that a defendant must discharge in raising the
relevant exception (from an evidential burden to a ‘balance
of probabilities’ in a civil action, and a ‘legal
burden’ in a criminal action).

16.12
Finally, the ‘output restriction’ purpose condition in
paragraph 44ZZRD(3)(a) is broadened to address any gap resulting
from the repeal of the separate prohibition on exclusionary
provisions by Schedule 3 to this Bill.

Human rights
implications

16.13
The amendments to confine the cartel provisions to conduct
affecting competition in Australian markets, and the broadening of
the ‘output restriction’ purpose condition, do not
raise any human rights issues.

16.14
This Schedule engages the right to the presumption of innocence, as
contained in Article 14(2) of the International Covenant on Civil and Political
Rights (ICCPR), insofar as it:

â¢
introduces new matters that the defendant must establish to raise
the relevant joint venture exception (that the joint venture is not
carried on for the purpose of substantially lessening competition,
and that the relevant provision is reasonably necessary for
undertaking the joint venture); and

â¢
increases the burden on the defendant to a legal burden rather than
an evidential burden.

16.15
A ‘reverse onus provision’ may be considered a
limitation on the right to the presumption of innocence when
charged with a criminal offence. This is not an absolute right.
Schedule 2 does not create new reverse onus provisions, as the
joint venture exceptions already place an evidential burden on the
defendant. Rather, Schedule 2 amends existing reverse onus
provisions.

16.16
The addition of new matters that the defendant must establish, in
order to raise the relevant joint venture exception, is appropriate
in light of the exceptions being broadened to be available in a
greater range of circumstances. The new matters to be established
also reflect the extremely broad definition of ‘joint
venture’ in section 4J. That definition does not, itself,
contain any express limitations on the purposes for which a joint
venture may be carried on. It is therefore necessary to include in
the exceptions a limitation that the joint venture must not be
carried on for the purpose of substantially lessening competition.
This limitation ensures that the exceptions may be made more widely
available, without undermining the integrity of the cartel conduct
prohibitions.

16.17
Similarly, the increase in the burden of proof on the defendant is
appropriate and justifiable in light of the extension of the
exceptions to arrangements or understandings containing a cartel
provision. Currently, the exceptions only apply to cartel
provisions contained in a contract, and in those circumstances it
is appropriate for the defendant to be under a lower, evidential
burden because the primary evidence as to the nature of the claimed
joint venture would be before the court (in the contract). Once the
relevant exception is raised by the defendant, the prosecution
would then have to discharge its burden to the applicable standard
(balance of probabilities in a civil action, and beyond reasonable
doubt in a criminal action) and thereby disprove the
exception.

16.18
In contrast, the amended exceptions are extended to arrangements
and understandings, in which case the joint venture provision may
be contained in informal documents, contained across several
documents, or not be contained in any form of written documentation
(for example, the provision may have been verbally discussed in one
or more conversations). In such cases, it is likely to be
relatively easy and inexpensive for a defendant to produce evidence
suggesting a reasonable possibility that their joint venture falls
within the relevant exception (that is, to meet an evidential
burden) even if the joint venture in fact does not satisfy the
elements of the relevant exception.

16.19
However, it would be extremely difficult and expensive for the
prosecution to obtain sufficient evidence to prove in the first
instance, to the applicable standard, that the relevant exception
did not apply. The prosecution would effectively be required to
prove a negative, and the evidence needed to do this may be known
only to, and held by, the defendant. This practical difficulty may
create scope for abuse of the joint venture exceptions by parties
who are not genuinely engaged in a joint venture to which the
exceptions apply.

16.20
In these circumstances, it is reasonable and appropriate to require
the defendant to produce stronger evidence as to the nature of the
claimed joint venture. The defendant will be in a unique position
to easily and cheaply produce such evidence, as they will have
ready access to the full range of formal and informal
correspondence between the parties.

16.21
It is important to note that the increase in the legal burden on
the defendant does not establish a presumption that, unless the
defendant discharges that burden, the defendant is guilty of
contravening the cartel conduct provisions. The prosecution must
still prove the contravention to the requisite standard.

Conclusion

16.22
This Schedule is compatible with human rights as it raises, but
does not unnecessarily, unreasonably or disproportionately limit,
the right to the presumption of innocence.

Schedule 3 - Price signalling and
concerted practices

Overview

16.23
Schedule 3 to this Bill repeals Division 1A of Part IV of the Act,
which relates to the anti-competitive disclosure of pricing
and other information (known as ‘price
signalling’).

16.24
The price signalling provisions are confined to the banking
industry and no cases have been brought for contravention of the
provisions since their introduction in 2012. Further, the Harper
Review found that the price signalling provisions have the
potential to overreach and capture pro-competitive
disclosures.

16.25
As recommended by the Harper Review, Schedule 3 repeals Division 1A
of Part IV of the Act, and expands section 45 to prohibit a
corporation from engaging with one or more other persons in a
concerted practice with the purpose, effect or likely effect of
substantially lessening competition.

16.26
The defences and exceptions applicable to section 45 are also
extended to cover concerted practices. Further, an exemption is
introduced for circumstances where the only parties to a concerted
practice are the Crown (in right of the Commonwealth, a State or a
Territory) and one or more authorities of that Crown, to reflect
the fact that although such entities may engage in trade or
commerce, they cannot benefit from the exception for related bodies
corporate.

16.27
As detailed in this Chapter under ‘ Schedule 4 - Exclusionary
provisions ’, Schedule 3 to this Bill also repeals
subparagraphs 45(2)(a)(i) and 45(2)(b)(i) to remove the separate
prohibition on exclusionary provisions from the Act.

Human rights
implications

16.28
Insofar as the existing defences and exceptions in section 45 are
extended to cover concerted practices, and a new exemption is
created for related bodies politic, this Schedule may appear to
engage the right to the presumption of innocence as contained in
Article 14(2) of the ICCPR.

16.29
However, that right only applies to criminal offences and therefore
is not applicable to section 45 and its exceptions. Further, these
amendments are in the interests of entities subject to section 45,
as they ensure there are appropriate exceptions available to the
new prohibition on concerted practices.

Conclusion

16.30
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 4 - Exclusionary
provisions

Overview

16.31
Schedule 4 to this Bill repeals the definition of
‘exclusionary provision’, as the repeal of the separate
prohibition on exclusionary provisions by Schedule 3 makes the
definition redundant.

16.32
The Harper Review found there is significant overlap between what
constitutes an exclusionary provision and what constitutes an
‘output restriction’ or a ‘market sharing or
division’ cartel provision. Given the lack of an
anti-overlap provision to prevent both prohibitions applying
to the same conduct, this creates uncertainty and complexity in the
law.

16.33
Consequential to the repeal on the separate prohibition on
exclusionary provisions, a defence specific to that prohibition
(section 76C) is also repealed as it is now redundant.

Human rights
implications

16.34
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.35
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 5 - Covenants affecting
competition

Overview

16.36
Schedule 5 to this Bill inserts definitions of
‘contract’ and ‘party’ into the Act and
defines those terms to include covenants.

16.37
A number of provisions of the Act which refer to contracts,
arrangements or understandings are largely duplicated with
reference to covenants. While there is a technical, legal
difference between a contract and a covenant, the Harper Review
found that this distinction made little to no impact on the
agreement’s effect on competition, and was therefore
unnecessary for the purposes of the Act.

16.38
By including covenants within the definitions of
‘contract’ and ‘party’, the separate
provisions on covenants are made redundant and are therefore
repealed by Schedule 5.

Human rights
implications

16.39
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.40
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 6 - Secondary
boycotts

Overview

16.41
Schedule 6 to this Bill increases the maximum penalty applying to
breaches of the secondary boycott provisions (sections 45D and
45DB).

16.42
Under section 76, a corporation found to be in breach of the
secondary boycott provisions is liable to a maximum civil pecuniary
penalty of $750,000. This is disproportionately low when compared
to the maximum penalty under section 76 for various other breaches
of the Act, which may be $10 million or higher.

16.43
The Harper Review saw no reason why the penalty for breaches of the
secondary boycott provisions should be significantly lower than the
penalty for other breaches, particularly given the harm to trading
freedom, and therefore to competition, which secondary boycotts
cause.

16.44
The amendment made by Schedule 6 aligns the penalty for breaches of
the secondary boycott provisions with the penalties for other
breaches of the competition law.

Human rights
implications

16.45
As far as it relates to engaging in boycott activity, Schedule 6
may engage work-related rights as contained in the
International Covenant on
Economic, Social and Cultural Rights (ICESCR), in
particular Article 8 which relates to the activities of trade
unions.

16.46
However, section 45DD makes it clear that boycotts are permitted
under the competition law if the dominant purpose of the conduct
relates substantially to employment matters, i.e. remuneration,
conditions of employment, hours of work or working conditions.
Consequently, the increased penalty in section 76 is only
applicable to secondary boycotts with a dominant purpose that does
not relate to employment matters.

16.47
Where a secondary boycott has a dominant purpose not related to
employment matters, but a non-dominant purpose that does relate to
employment matters, the boycott may be prohibited under section 45D
or 45DB. To this extent, sections 45D and 45DB may engage the
rights described in Article 8 of the ICESCR.

16.48
However, Schedule 6 does not create a new regulation on the activities of
trade unions, nor does it alter the scope of the existing
prohibitions. Rather, Schedule 6 increases the penalty for the
existing prohibitions in sections 45D and 45DB, to align with the
maximum penalties applicable to other breaches of the competition
law.

16.49
The existing limitation is necessary to protect the broader
economic welfare of Australians by preventing secondary boycotts
which are harmful to competition and are not justified by a
dominant purpose which is substantially related to employment
matters. The increase is reasonable, as it brings the maximum
penalty for a breach of the secondary boycott provisions in line
with, and does not exceed, the maximum penalties for other breaches
of the competition law. Further, the increased penalty is
proportionate relative to the other penalties in the Act and
relative to the level of harm that can be caused by the conduct
which the penalty seeks to deter.

Conclusion

16.50
This Schedule is compatible with human rights as it engages, but
does not further limit, work-related rights in the
ICESCR.

Schedule 7 - Third line
forcing

Overview

16.51
Schedule 7 to this Bill amends the Act to only prohibit third line
forcing where it has the purpose, effect or likely effect of
substantially lessening competition.

16.52
Third line forcing is prohibited in section 47 along with various
other forms of exclusive dealing. However, it is the only form of
exclusive dealing which is prohibited on a per se basis; the other
forms, including second line forcing (or ‘bundling’)
are prohibited only if they have the purpose, effect or likely
effect of substantially lessening competition.

16.53
The Harper Review found there was no need for third line forcing to
be prohibited on a per se basis while similar forms of exclusive
dealing are prohibited where they have the purpose, effect or
likely effect of substantially lessening competition.

16.54
This amendment ensures that all forms of exclusive dealing are
assessed under the same test.

Human rights
implications

16.55
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.56
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 8 - Resale price
maintenance

Overview

16.57
Schedule 8 to this Bill amends the resale price maintenance (RPM)
and notification provisions, to allow a corporation or person to
notify the Commission of RPM conduct as an alternative to seeking
authorisation.

16.58
RPM is prohibited under section 48 on a per se basis, and
authorisation is available for RPM. However, applications for
authorisation for RPM are rare, and the Harper Review considered
that the cost and delay involved with seeking authorisation may be
a real deterrent to businesses seeking authorisation for RPM.

16.59
As recommended by the Harper Review, the amendments by
Schedule 8 (and also Schedule 9) make notification available as an
alternative means of seeking exemption from the RPM prohibition in
section 48. Notification is generally a quicker and less
expensive process than authorisation.

16.60
Schedule 8 also introduces an exception for RPM conduct between
related bodies corporate, reflecting the general tenet of
competition law that the companies within a corporate group are
treated as a single economic entity and are not considered to be
competitors.

Human rights
implications

16.61
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.62
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 9 - Authorisations, notifications
and class exemptions

Overview

16.63
Schedule 9 to this Bill amends the notification and authorisation
provisions in Part VII to simplify the provisions and processes,
and grants the Commission new ‘stop notice’ and
‘class exemption’ powers. Schedule 9 also amends Part
IX, which relates to Australian Competition Tribunal (Tribunal)
review of determinations of the Commission.

Authorisation process and Tribunal
review

16.64
Currently, the process for merger authorisations is separate to the
general authorisation process, and the Tribunal is the first
instance decision-maker for merger authorisations, rather
than the Commission. Further, the Act currently provides for formal
merger ‘clearance’ in addition to authorisation.

16.65
Schedule 9 consolidates the various authorisation provisions into a
single authorisation process, by repealing Division 3 of Part VII
which contains the merger authorisation and clearance provisions,
and amending Division 1 of Part VII to incorporate merger
authorisations within the general authorisations provisions. The
provisions on formal merger clearances are not incorporated into
Division 1, as the provisions are unduly complex and had never been
used.

16.66
Given the commercial and time sensitivity of merger transactions,
merger authorisations are subject to a number of procedures that
are different to other types of authorisations. The main
distinction is that domestic merger authorisations must be
determined by the Commission in 90 days, rather than 6 months. Some
of the procedures applicable to non-merger authorisations (e.g.
draft determination and opportunity for a conference under section
90A) are not feasible within this shorter timeframe, and are
therefore not applicable to merger authorisations.

Class exemptions

16.67
Under the current Part IV, common business practices may be
captured by one or more prohibitions despite there being no
competition or public interest concerns. To seek exemption,
businesses must individually make a notification or apply for
authorisation (as applicable), and the Commission must individually
assess each notification and application for authorisation.

16.68
Schedule 9 grants the Commission a power to make a ‘class
exemption’ for business practices (‘conduct of a
kind’) that do not generate competition concerns or are
likely to generate a net public benefit. This reduces compliance
and administration costs, increases certainty and creates safe
harbours for businesses.

16.69
A class exemption will take the form of a legislative instrument,
and consistently with subsection 33(3) of the Acts Interpretation Act 1901 , the
Commission’s power to make the class exemption includes a
power to vary or revoke that class exemption.

16.70
The Commission also has a power under section 95AB to withdraw the
benefit of a class exemption in a particular case, where the
conduct has the actual or likely effect of substantially lessening
competition and this detriment would not be outweighed by an actual
or likely benefit to the public.

Collective bargaining notifications and stop
notices

16.71
Currently, collective bargaining may be prohibited under the cartel
provisions in Division 1 of Part IV of the Act, or under section 45
which deals with contracts, arrangements or understandings that
restrict dealings or affect competition. However, collective
bargaining is not always detrimental to competition and consumer
welfare. For example, if smaller businesses are, together, able to
negotiate with bargaining power equal to one large firm, this may
achieve a more efficient and pro-competitive outcome.
Similarly, in some circumstances, collective boycotts can be an
appropriate tool to support collective bargaining.

16.72
While it is possible to include collective boycott conduct in a
notification for collective bargaining, such notifications are
relatively rare, and this may be due to a belief that a
notification including collective boycott conduct will not be
approved by the Commission.

16.73
The Harper Review recommended reforming the notification provisions
to introduce greater flexibility into the notification process for
collective bargaining, and thereby encourage greater use of the
process by small businesses.

16.74
This includes a power for the Commission to impose conditions on
notifications involving collective boycott activity, and a
‘stop notice’ power allowing the Commission to require
collective boycott conduct to cease where it causes imminent,
serious public detriment.

Human rights
implications

Authorisation process and Tribunal
review

16.75
Insofar as the jurisdiction of the Tribunal is altered, so that it
is no longer the first instance decision-maker for merger
authorisations, this engages fair trial and fair hearing
rights.

16.76
However, by making the Commission the first instance
decision-maker for merger authorisations, this allows the
Tribunal to undertake merits review of the decision. Currently, the
only means of appealing the Tribunal’s decision on a merger
authorisation is to take the matter to the Federal Court. This
amendment provides an additional avenue of review which was not
previously available, which promotes fair trial and fair hearing
rights.

16.77
While the Tribunal’s review of general authorisation
determinations is a full re-hearing of the matter, in the case of
mergers the review is to be based on the material before the
Commission. This aspect of Schedule 9 also engages fair trial and
fair hearing rights as the rules of evidence are regulated in
reviews before the Tribunal. However, this limitation is reasonable
and necessary to ensure that parties present all relevant evidence
to the Commission in an application for merger authorisation. This
limitation also ensures that the Tribunal review process cannot be
used vexatiously to damage a merger transaction, by effectively
turning the review into a full rehearing.

16.78
Further, this limitation is not absolute and a mechanism is in
place to ensure applicants for review are not unreasonably or
unnecessarily disadvantaged. Where evidence was not in existence at
the time of the initial application, the Tribunal may allow that
new evidence to be produced. This appropriately balances the
interests of all parties to a Tribunal review in relation to a
merger authorisation.

Class exemptions

16.79
Insofar as the determination of a class exemption is not subject to
merits review by the Tribunal, this may appear to engage fair trial
and fair hearing rights as contained in Article 14 of the ICCPR.
However, as class exemptions are legislative instruments, it is not
appropriate that the determination of a class exemption should be
reviewable by a Tribunal conducting merits review. Rather, class
exemptions will be disallowable by the Parliament. Insofar as the
Commission has the power to withdraw the benefit of a class
exemption in particular cases, fair trial and fair hearing rights
are engaged. However, such rights are promoted by Schedule 9
because the Commission’s decision to withdraw the benefit of
a class exemption in an individual case is reviewable by the
Tribunal.

Collective bargaining notifications and stop
notices

16.80
Insofar as it deals with collective bargaining and collective
boycotts, Schedule 9 may appear to engage work-related rights
as contained in the ICESCR, in particular Article 8 which relates
to the activities of trade unions. However, such rights are not
engaged, for a number of reasons.

16.81
Firstly, unlike secondary boycotts, collective bargaining and
collective boycotts are engaged in by two or more corporations , rather than two or
more persons or a
trade union comprised of persons.

16.82
Secondly, collective bargaining and collective boycotts are not
engaged in for reasons relating to employment matters. Rather, they
are typically engaged in because there is an inequality of
bargaining power between corporations who are trading with each
other.

16.83
Thirdly, while the Commission has the power to issue a stop notice
requiring collective boycott activity to cease, this is justified
because the power is only exercisable to prevent imminent serious
public detriment. Further, the Commission may currently achieve the
same objective of preventing public detriment by not allowing a
notification to stand in the first place.

16.84
For these reasons, work-related rights are not engaged by aspects
of Schedule 9 relating to collective bargaining or collective
boycotts, including stop notices.

Conclusion

16.85
This Schedule is compatible with human rights as it engages, but
does not unreasonably or unnecessarily limit fair trial and fair
hearing rights as contained in Article 14 of the ICCPR.

Schedule 10 - Admissions of
fact

Overview

16.86
Schedule 10 to this Bill extends section 83 of the Act so that a
party bringing certain proceedings may rely on both admissions of
fact and findings of fact made in certain other proceedings.

16.87
Currently, section 83 allows for findings of fact made by a court,
in certain proceedings against a corporation, to be used as prima
facie evidence against the corporation in certain other
proceedings. This section helps to reduce the costs for private
litigants, who may rely on findings of fact without the cost and
delay associated with establishing the same fact again.

16.88
This amendment is intended to further facilitate access to justice
by reducing the cost for private litigants to pursue actions
against corporations for breaches of the competition law.

16.89
An admission of fact made in certain proceedings will only be prima
facie evidence of that fact in certain other proceedings, if that
admission is proven by either:

â¢
a document under the seal of the court from which the admission
appears; or

â¢
a document from which the admission appears that is filed with the
court.

Human rights
implications

16.90
This Schedule engages fair trial and fair hearing rights as
contained in Article 14 of the ICCPR, as it regulates the rules of
evidence before the Court by placing limitations as to how
admissions of fact made in earlier proceedings may be used as prima
facie evidence of that fact in later proceedings.

16.91
However, this limitation is necessary to ensure that an admission
of fact may only be relied upon as prima facie evidence in later
proceedings where it has been put before the court in the initial
proceedings, and thereby tested by that
court.

16.92
Insofar as this Schedule allows for an admission by a person to be
used against that person in subsequent proceedings, this Schedule
appears to engage the right against self-incrimination as also
contained in Article 14(3)(g) of the ICCPR. However, that right
generally protects a person from being compelled to testify against
themselves or to confess guilt.

16.93
An admission of fact can only be proven by a document which was
filed with the court in the first proceedings by the person making
the admission. The person making the admission will be the person
against whom the subsequent proceedings are brought, and who was
found in the first proceedings to have contravened, or to have been
involved in a contravention of, certain provisions of the Act. The
person will have voluntarily made the admission, and nothing in
section 83 provides for a person to be compelled to make such an
admission.

16.94
Further, the application provision of Schedule 10 ensures that
admissions of fact can only be relied upon if they are made on or
after the commencement of Schedule 10. This ensures that past
admissions cannot be relied upon for a purpose which the person
making the admission was unaware of at the time of the admission,
and future admissions will be made with the knowledge as to how
they may be used in subsequent proceedings.

Conclusion

16.95
This Schedule is compatible with human rights as it engages, but
does not unreasonably or unnecessarily limit, fair trial and fair
hearing rights, including the right against self-incrimination, as
contained in Article 14 of the ICCPR.

Schedule 11 - Power to obtain information,
documents and evidence

Overview

16.96
Schedule 11 to this Bill extends the Commission’s power to
obtain information, documents and evidence in section 155, to allow
section 155 notices to be issued in relation to additional
matters.

16.97
The Commission may now issue a section 155 notice to investigate
alleged contraventions of court enforceable undertakings given
under section 87B of the Act or section 218 of the Australian
Consumer Law. This extension was recommended by the Harper Review,
and protects the integrity of such undertakings.

16.98
The Commission may now also issue a section 155 notice to
investigate matters relevant to the Commission’s
determination in relation to an application for merger
authorisation under subsection 90(1). This reflects the fact that
the Commission is now the first-instance decision-maker for
merger authorisation applications.

16.99
Schedule 11 also introduces a new ‘reasonable search’
defence to the offence of refusing or failing to comply with
section 155, as recommended by the Harper Review. This
defence recognises that strict compliance with a section 155 notice
may be very costly depending on the circumstances. However, a
person wishing to rely on the reasonable search defence is under a
legal burden.

16.100
Finally, Schedule 11 also increases the fine for non-compliance
with section 155, as recommended by the Harper Review, in line with
similar notice-based evidence gathering powers of other regulators.

Human rights
implications

16.101
Schedule 11 may engage a number of the applicable rights or
freedoms.

16.102
Firstly, insofar as Schedule 11 requires the production of
information, documents or evidence, and depending on the nature of
the material requested, this may appear to engage both legal
professional privilege or the right against self-incrimination.

16.103
In relation to the right against self-incrimination, as contained
in Article 14(3)(g) of the ICCPR, the existing subsection 155(7)
already engages and places a limitation on that right. That
subsection provides that a person is not excused from producing
information, documents or evidence on the basis that such material
would tend to incriminate that person or expose that person to a
penalty. The amendments to Schedule 11 do not further limit
the right against self-incrimination, except to the extent that
section 155 notices may now be issued in relation to additional
matters. However, subsection 155(7) ensures that
self-incriminating material cannot be used against that
person in any criminal proceedings other than proceedings for an
offence against section 155. Therefore, to the extent that
section 155 engages the right against self-incrimination, the right
is not unreasonably or disproportionately limited because the use
of any self-incriminating material produced in response to a
section 155 notice is extremely restricted.

16.104
In relation to legal professional privilege, subsection 155(7B)
makes clear that a person is not required to produce a document
that would disclose information that is the subject of legal
professional privilege. The amended section 155 will still be
subject to subsection 155(7B), which prevents any abrogation
of legal professional privilege.

16.105
Secondly, any amendment to an information-gathering power such as
section 155 may appear to engage the right to privacy as contained
in Article 17 of the ICCPR. However section 155 contains
limitations on when a section 155 notice can be issued; the
Commission must have reason to believe the material requested
relates to a possible contravention of the Act, or is relevant to
specific decisions the Commission is required to make under the Act
(such as determining a merger authorisation). This limitation means
that a section 155 notice will request information, documents and
evidence related to conduct, not personal information. Further, the
use of this power is subject to additional restrictions. To the
extent that the material requested in a section 155 notice may also
contain personal information, the Commission must comply with the
requirements of the Privacy Act
1988 , which provides for the protection of personal
information and among other matters sets standards for the
collection and use of personal information.

16.106
Thirdly, to the extent that the amendments to section 155 are
applied retrospectively, this may appear to engage the prohibition
on retrospective criminal laws as contained in Article 15 of the
ICCPR. However, the retrospective application provision only makes
the reasonable search defence available for notices given before
the commencement of Schedule 11. The increased penalty for
non-compliance with a section 155 notice does not apply
retrospectively.

16.107
Finally, the fact that a defendant is under a legal burden to
establish the ‘reasonable search’ defence engages the
right to the presumption of innocence as contained in Article 14(2)
of the ICCPR. This is not an increase in an existing burden, but
rather the burden deemed reasonable, necessary and appropriate in
order to create a new defence that was not previously
available.

16.108
The reasonable search defence means that a person will not be
guilty of an offence under subsection 155(6A) to the extent the
section 155 notice relates to producing documents, and after a
reasonable search the person is not aware of the documents, and
that person has provided the Commission with a written response to
the notice which includes a description of the scope and
limitations of the search.

16.109
The facts amounting to whether a reasonable search has been
conducted will be uniquely within the knowledge of the defendant.
For example, only a defendant will know how many documents it could
possibly have searched, and how many documents were actually
searched. With this knowledge, the defendant could easily and
cheaply produce evidence to establish, on the balance of
probabilities, the elements of the defence. By contrast, it would
be extremely costly and difficult for the prosecution to discover,
through its own investigations, evidence sufficient to prove a
negative: that the defendant did not conduct a reasonable search.

16.110
In these circumstances, it would not be appropriate to introduce
the concept of a ‘reasonable search’ as either an
element of the offence, or a defence with an evidential burden,
without significantly undermining the Commission’s primary
power for conducting investigations and enforcing the Act.

Conclusion

16.111
This Schedule is compatible with human rights as it engages, but
does not unreasonably, unnecessarily or disproportionately
limit:

â¢
the right against self-incrimination;

â¢
legal professional privilege;

â¢
the prohibition on retrospective criminal laws; and

â¢
the right to the presumption of innocence.

Schedule 12 - Access to
services

Overview

16.112
Schedule 12 to this Bill amends Part IIIA of the Act, which
contains the National Access Regime (Regime), to ensure that it
better addresses the economic problem of an enduring lack of
effective competition in markets for nationally significant
infrastructure services.

16.113
The primary changes included in this Schedule are to:

-
amend and clarify the declaration criteria that must be used by the
Council and designated Minister;

-
amend the default position, whereby the Minister is now deemed to
have made a decision in accordance with the declaration
recommendation of the Council if they have not responded within 60
days; and

-
amend and clarify the scope of a determination made by the
Commission to ‘extend’ a facility in an access
dispute.

-
provide the Minister with power to revoke certification on
recommendation by the Council, if the regime ceases to be
effective.

Human rights
implications

16.114
This Schedule creates a new power for the Commonwealth Minister to
decide to revoke a decision made under section 44N to certify that
a regime established by a State or Territory for access to a
service is an effective access regime. Item 37, new subsection
44O(1A) establishes that this decision is reviewable by the
Tribunal.

16.115
This engages fair trial and fair hearing rights as contained in
Article 14 of the ICCPR, as it alters the jurisdiction of the
Tribunal. However, the change promotes these rights, as it adds to
the rights of review already available under the Act.

16.116
This Schedule inserts a new section 44FA(4) to establish a process
for the Council to make information it receives in response to a
notice under section 44FA(1) publicly available, subject to any
confidentiality concerns.

16.117
This engages the right to privacy under Article 17 of the ICCPR,
but given the nature of the information that is likely to be
received pursuant to a section 44FA(1) notice, it does not infringe
upon this right. Moreover, the changes in section 44FA(4) protect
this right by establishing that a person who provided information
in response to a section 44FA(1) notice can require that it be
returned to them.

Conclusion

16.118
This Schedule is compatible with human rights as it engages but
does not unreasonably, unnecessarily or disproportionately limit
fair trial and fair hearing rights and the right to privacy.

Schedule 13 - Transitional
provisions

Overview

16.119
Schedule 13 to this Bill inserts a new Division 3 into Part XIII of
the Act, which details the transitional application of amendments
made by a number of other Schedules to this Bill.

â¢
Applications for merger clearances and authorisations made, and not
determined, before commencement.

Human rights
implications

16.121
This Schedule does not engage any of the applicable rights or
freedoms.

Conclusion

16.122
This Schedule is compatible with human rights as it does not raise
any human rights issues.

Schedule 14 - Other
amendments

Overview

16.123
Schedule 14 to this Bill implements measures to streamline the
administration of the Competition and Consumer Act 2010
(the Act) to reduce compliance burdens for business, individuals
and within Government, while preserving the protections available
under the Act. The Bill has a particular focus on the requirements
of the ACL, which is set out in Schedule 2 of the Act.

16.124
Specifically, Schedule 14:

â¢
removes the requirement for private litigants to seek Ministerial
consent to bring an action for a breach of the Act that takes place
overseas (Part 1);

â¢
extends the jurisdiction of State and Territory courts to hear
actions under the Act for pyramid selling and unsafe goods
liability (Part 2);

â¢
removes a redundant requirement for the ACCC to keep certain
records (Part 3) and rectifies drafting errors relating to overlap
with the Criminal Code Act
1995 (Part 5) and the application of a misleading
conduct provision in the ACL (Part 7);

â¢
permits the disclosure of certain information by the ACCC to
specific agencies where it is reasonably necessary to protect
public safety (Part 4);

â¢
clarifies the requirements in the ACL regarding the cooling off
period for unsolicited consumer agreements (Part 6); and

â¢
permits the ACCC to seek a court order directing a person to comply
with a notice to furnish information, produce documents or give
evidence (Part 8).

Human rights
implications

16.125
Aside from Part 4, Schedule 14 does not engage any of the
applicable rights or freedoms.

16.126
Part 4 of Schedule 14 improves the ACCC’s ability to share
notices it receives under section 132A of the ACL with specified
agencies where it is reasonably necessary to protect public safety.
To the extent that a particular notice contains personal
information, its disclosure may engage the right to privacy under
Article 17 of the ICCPR. However, to the extent that a particular
notice contains personal or confidential information, the
disclosure of such notices to other agencies or bodies following
the implementation of Part 4 of Schedule 14 will still be required
to comply with the law, including the Privacy Act 1988 . Specifically, the
Privacy Act 1988
provides for the protection of personal information in the
Commonwealth public sector and private sector and sets the standard
for the collection, storage, security, use, disclosure and quality
of personal information.

16.127
The Privacy Act 1988
also creates obligations on agencies and organisations regarding
access to, and correction of, an individual’s own personal
information. Further, the disclosure of information permitted by
Part 4 is restricted by the requirement that the regulator be
satisfied that the disclosure is reasonably necessary to protect
public safety.

Conclusion

16.128
This Schedule is compatible with human rights as it does not raise
any human rights issues (aside from Part 4) The amendment in Part 4
of Schedule 14 is consistent with Article 17 of the ICCPR because,
to the extent the amendment authorises the disclosure of
confidential information, this is necessary to achieve a legitimate
public purpose and any disclosure is subject to the protections of
the Privacy Act
1988 .

Items
6 to 10 and 30 to 37, Division 1A of Part 1 of Schedule 1,
subsections 45(1) to 45(3), 45(5A), 45(6), 45(7) to 45(9), 51(2AA)
and 51(4), and paragraphs 51(2)(a), 51(2)(aa), 51(2)(b), 51(2)(c),
51(2)(d) and 51(2)(g) of Schedule 1 to the Act